Trustee Indemnity for Charities & Non-Profits
Most charities and non-profit groups realise it’s prudent to have insurance in place even though, in most instances, it’s not required by law. When it comes to trustee indemnity; which boards need to consider buying this cover?
Sometimes called ‘directors & officers insurance’, trustee indemnity insurance provides cover for decisions and omissions made by trustees which result in a claim for financial loss or bodily injury.
Who is classed as a ‘trustee’? One specialist charity insurer defines trustees as “any natural person” who is a:
- Management committee member
- Shadow or de facto director
- Employee acting in a managerial or supervisory capacity
A trustee indemnity policy will cover the costs of defending both actual or alleged claims as well as any subsequent settlement figure awarded to a claimant. The policy specifically provides cover for wrongful acts including breach of duty and breach of trust.
Who benefits from the policy?
- The policy provides cover for individual trustees if they are sued in their individual capacity. This includes legal actions from funders, fellow trustees and others.
- The policy can also provide cover for the ‘entity’ or ‘organisation’. This extension provides cover should legal action be brought against the charity (as opposed, or in addition, to an individual) for the wrongful act of a trustee.
We advise each of our charity and non-profit clients to consider buying trustee indemnity cover. If this cover is not taken up and a claim is made against an individual trustee, or for charity, for a wrongful act of a trustee; then the costs of defending and potentially settling the claim may need to be met by individual trustees.
We are able to offer specific advice to charitable organisations as to how their employees, volunteers and trustees can be adequately protected.