Trustee Indemnity for Charities

Trustees are subject to what is called ‘joint and several liability’. This means that any individual trustee can be held responsible for the acts of any of their co-trustees. Charities themselves can suffer through a trustee’s negligence. Signing a document to release funds can be the responsibility of a trustee and, if done in error, can cause substantial damage to a charity and its reputation.

Charities should ensure that trustees, employees and volunteers go through an effective induction process so that they are fully prepared for the job they are taking on.

They should also make their commitment to their trustees clear. They can do this by making them fully aware of the true extent of their duties and by encouraging regular contact with co-trustees, and with the Charity Commission if necessary.

How insurance can help…

Charities have found it difficult in the past to recruit trustees, because people are more cautious about taking on the responsibilities placed on trustees.

Charity trustee insurance provides a reassuring safety net – if a trustee makes an honest mistake, trustee insurance is there to protect them. It is a demonstration of the charity’s commitment to their trustees.

Trustee indemnity insurance makes good certain financial losses suffered by a charity as a result of a trustee’s actions. It can also compensate third parties for their financial loss as a result of dealings with the charity. It does not, however, cover reckless acts.

There’s no substitute for professional standards and good risk management, but insurance can give trustees added confidence that they are protected.

For further advice on charity insurance, please find contact Tony Gibbs, Sales Director – 0118 9165 480

*Information correct as of 1st May 2016

Author: Tony Gibbs | January 19, 2009

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