Even if trustees volunteer they need protection for the decisions they make
Trustee Indemnity Insurance
What is Charity Trustee Indemnity Insurance?
Anyone considering taking up the role of a charity trustee must be aware of their legal duties, responsibilities and potential liability. If you are a charity trustee you need to be protected by charity trustee indemnity insurance as you are an asset to the charity and need protection from the numerous liabilities you could face, and that’s where appropriate charity insurance comes in.
Charity trustee liability arises out of the duties the trustee takes on for the charity organisation they are appointed by. Personal obligations which come with being a charity trustee generally only arise if they fail to discharge duties which cause loss to the charity or improper gain to the trustee.
If you are a trustee of an incorporated charity you are treated in a comparable way to company director and are generally not liable for the charity debts. However, this may not be the case where a trustee has allowed the charity to continue to trade or incur credit and losses when it was clear that the charity could not avoid insolvency. The actual knowledge, skill and experience of the charity trustee will be considered. So, a higher standard of care will be applied to a professional trustee, such as a lawyer and accountant, than to a non-professional trustee.
By contrast, if you are a trustee of an unincorporated charity you are at much greater risk of personal liability. Unincorporated charities have no separate legal personality and so the trustee will have contracted in their own name. Although a charity trustee will often be entitled to be indemnified out of the assets of the charity, the indemnity will be worthless if the charity is impecunious. Contractual provisions which seek to limit trustee liability to the value of the charity assets are generally effective, but will not extend to liabilities incurred other than by contract.
WRS Insurance Brokers are specialists in charity insurance and can help charities get the protection that their trustees need and deserve. It utilises a small group of specialist trustee liability insurance companies who understand the charity market and can provide indemnity with limits from £100,000 to £5million for past and present trustees.
The duties and responsibilities of charity trustee liability are summarised in publication CC3 produced by the Charity Commission of England and Wales.
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