Why do charities need insurance?
Operating in the public eye, charities bear significant responsibilities to their beneficiaries, donors, and communities. Handling sensitive data, managing volunteers, organising events, and making tough financial decisions with limited resources mean charities face unique risks. Insurance can provide protection, helping you manage these risks and continue making an impact without the fear of unexpected costs derailing your mission.
An injured volunteer
Volunteers are key to many charities, and their safety is essential. But during events, training sessions, and meetings, accidents can happen, and you could be held responsible for injuries.
For instance, if a volunteer tripped over a rug during an event and sustained an injury, your charity could be held liable for the incident. Employers’ liability insurance can help cover claims for injury in situations like this.
A data breach
Between donor payment details, customer data, and confidential beneficiary records, many charities store lots of sensitive information. This can make them a target for cybercriminals and vulnerable to data breaches.
Let’s say your database is hacked, exposing the personal and financial information of hundreds of donors. Now, you must notify affected individuals and the Information Commissioner’s Office (external link), potentially facing penalties and reputational damage.1 (external link) Some donors become identity victims, leading to compensation claims.
Cyber and data insurance can help cover investigation costs, legal compliance, notification expenses, and potential claims, while providing expert support to manage the crisis.
Accusations against trustees
Trustees have legal duties to act in the charity’s best interests and manage finances responsibly.2 (external link) So, they can be held personally liable when things go wrong.
For example, a volunteer might claim one of your trustees acted wrongfully, prompting an investigation by the Charity Commission. Trustees and individual liability insurance could support you should this happen.
What insurance is available for charities?
Public and products liability insurance
Public liability insurance can provide support when someone makes a claim against you if they are injured or their property is damaged in relation to your activities. This insurance can help pay compensation awards if they decide to claim against you, as well as covering your legal defence costs.
Product liability insurance is normally included with public liability. It can help if your charity is accused of causing injury, illness, or damage because of a faulty product you sell, produce, or supply.
Cyber and data insurance
Charities often handle sensitive information about donors, volunteers, beneficiaries, and trustees, which can make them attractive targets for cybercriminals.3 (external link) Cyber and data insurance can help protect your charity against cyber attacks and data breaches.
A data breach can come with significant financial costs and damage your charity’s reputation with donors and the communities you serve. In the event of an attack or breach, this cover can help with investigation costs, notification expenses for affected individuals, and potential fines or penalties.
Trustees and individual liability insurance
Trustees and individual liability insurance can provide support when claims are made against trustees. Trustees can be held personally liable, so their own assets can be at risk in the event of a claim.
The cover can help if a volunteer, regulator, service recipient, or member of the public claims one of your trustees has acted wrongfully, breached their duty of care, or has been negligent.
Tell us a little more about your charity or organisation. We’ll help you to build your quote and explore any other insurance needs.
Build my coverInsurance for charities: FAQs
Do charities need property insurance?
Property insurance can help to protect your charity, whether your organisation owns or rents its office buildings or support centres. Buildings insurance can provide reassurance if you own the premises, while a contents insurance policy can help if you rent.
Your workplace could be vulnerable to damage resulting from extreme weather, fire, or a break-in. In the event of such an incident, buildings cover can fund repairs to the fabric of the building and contents cover protects your physical assets inside, such as furniture and computers.
Do charities need insurance for events?
Events are often an important part of fundraising and can be crucial to a charity’s income. But charity event insurance can help to protect you if one of your events doesn’t go to plan, for example, if an attendee suffers an injury.
How much liability does a charity have?
The liability a charity and its trustees hold depends on the structure (external link)used to set up the organisation. For example, trustees of both charitable incorporated organisations (CIOs) and charitable companies have limited or no liability for the organisation’s debts or liabilities.
According to the NCVO, the limited liability charity trustees can face include:
- Liabilities to third parties with whom they have a legal relationship.
- Legal action by the Charity Commission or Attorney General over a breach of trust.
- Criminal liabilities (only in a small number of specific situations).
What insurance must a charity have by law?
If you have employees at your charity, you may be legally required (external link) to purchase employers’ liability insurance. Charity volunteers are classed as employees under UK law (external link).
While trustees and individual liability insurance isn’t a legal requirement for a charity, trustees do have responsibilities to uphold. For instance, if a trustee is accused of deliberate wrongdoing or illegal activity, they may be investigated by the Charity Commission. Trustees and individual liability insurance can help to cover legal defence costs and awards of damages.
Does cyber insurance cover illegal threats?
Hiscox cyber insurance can help protect your charity against an illegal threat. This can include a threat from a third party to damage, destroy, or corrupt your computer system, or to carry out a cyber attack.
Related articles and guides
What types of insurance do charities need?
If you run a charity and want to know what insurance is best for you our latest FAQ has all the answers you need.
Volunteer injuries: How insurance helped our client
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Charity vs non-profit: What’s the difference?
Learn the difference between a charity and a non-profit with our blog. While similar, there are crucial differences between the two.