The benefits of trustee indemnity insurance for charitable or religious organisations

According to Statista, as of December 2023, there were approximately 168,850 registered charities in England and Wales alone.[1] Additionally, the latest figures also show that Scotland has over 25,000 charities[2] and Northern Ireland has over 7,500 charities.[3]

So, with over 200,000 registered charities across the UK, a sizeable percentage of the population may find themselves acting as a trustee for a charitable organisation at one point or another.

As the guardians of your organisation, trustees can find themselves in trouble personally if their business is in trouble. But, to combat this, you can ensure your trustees are fully protected with trustee indemnity insurance.

Here’s a little more detail for you…

What is trustee indemnity insurance?

Trustee indemnity insurance financially protects individuals in positions of authority if a claim is made against them personally. Trustee indemnity insurance will provide cover for legal fees associated with defending allegations and any damages that arise from it.

As part of the Charities Act 2011, not-for-profit organisations can pay for trustee indemnity insurance out of their own funds or alternatively, individuals can buy their own policy.

Who can be covered under trustee indemnity insurance?

Being a trustee for a charitable or religious organisation is a big responsibility and with that comes a lot of pressure. Trustee indemnity insurance can cover a range of roles within your charitable or religious organisation, such as a director, officer, governor, committee member, senior manager, or any other key decision-maker.

What can be covered under trustee indemnity insurance?

If your trustee is accused of a criminal act, the associated legal fees can be covered under your trustee indemnity insurance, including defence and settlement fees. This could cover your trustee if they are accused of the following:

Maladministration of funds
Breach of duty
Breach of trust
Breach of authority
Breach of health and safety regulations
Unfair dismissal
Discrimination
Negligence
Defamation

Is trustee indemnity insurance a requirement by law?

Although not required by law, most charitable and religious organisations realise it’s prudent to have this insurance in place.

What are the benefits of trustee indemnity insurance?

As mentioned previously, the main benefit of trustee indemnity insurance is that it financially protects individuals in authority should a claim arise against them. After all, claims of this nature can be very costly to defend. However, that is not the only benefit.

Having trustee indemnity insurance can help your charity/religious organisation attract and retain the best trustees as they are no longer risking their personal assets based on decisions they made with good intention on behalf of your organisation. This insurance can encourage people to join and support your charitable or religious organisation as a trustee as it reduces their risk (especially bearing in mind that some trustees work on a voluntary basis).

Is there any way to extend my trustee indemnity insurance?

As well as cover for individuals, trustee indemnity policies can be modified to provide protection for your charitable or religious organisation itself should legal action be taken against one of the trustees of the charity or religious organisation.

If you have a question or query about anything we have discussed or want to know more? Get in touch with Edwards Insurance Brokers on enquiries@edwardsinsurance.co.uk or 01564 730900.

[1] Charities in the UK – Statistics & Facts | Statista

[2] Charities (Regulation and Administration) (Scotland) Bill | Scottish Parliament

[3] Register of charities | The Charity Commission for Northern Ireland (charitycommissionni.org.uk)