Typical Charity Exposures
1) Liability of its Directors
If a charity is incorporated the potential liabilities of its directors can be daunting.
- Companies Act – (with over 220 possible offences)
- Insolvency Act – (wrongful trading)
- Health and Safety at work Act
- Data Protection Act
- Consumer Protection Legislation
- Financial Services Act
- EEC Directors and Regulators
- Racial and Sex Discrimination Legislation
- Disabled Act
2) General Liabilities
Trustees of charities often give advice or offer services in their everyday running of a charity and therefore can open themselves up to personal liability claims, for neglect , errors or omissions, there is no protection against these commercial liabilities unless an insurance policy is in force. Which in the main would cover the charities for the defence of an allegation and should the charity then have been found to be neglectful in their duties, cover the damages costs liabilities up to the chosen level of insurance cover.
In general the charity needs a broadly worded policy to indicate cover for the following exposures:
- Liability for Directors
- Professional Indemnity Cover
- Use of funds collected (not financial loss of investment then selves)
- Fidelity – dishonest, fraudulent, criminal, acts of a manager/s or employee/s
- Loss of Documents
- Executive covers – liabilities
- Employment practices liabilities i.e. employment disputes including cost for things such as official investigations enquiries, health safety etc
- Indemnification of innocent trustees / directors of the charity
The list could go on, but clearly most charities should consider seriously their vast exposures in these areas and obtain suitable insurance covers to protect their employees, trustees and directors and the very structure of the charity itself.
