What exactly is trustee indemnity insurance?

In this final series of posts which answer some of frequently asked questions we receive from customers looking for village hall insurance, we now look at trustee indemnity insurance.

The purpose of this cover is to provide cover for individual trustees, should a claim be made against them over a wrongful act. This could be a breach of duty/trust or mismanagement of funds. A claim under this section of cover could leave a trustee legally liable to pay thousands out in costs and damages, without adequate cover they could be left to pay the claim out of their own personal funds.

Even in cases where charities have incorporated to limit trustees/directors liability in terms of debts, they still have unlimited liability for their actions. This emphasises the importance of ensuring that trustees can display the necessary skill and knowledge involved in the running of the organisation.

It is important that trustees retain an up to date working knowledge of decisions being made as it is possible that the board can be held jointly liable to pay the costs of any claims.  Below are some claims examples:

  • In order to save the company money, a trustee decided not to service the company vehicles to the appropriate level. A fatal accident occurred involving one of the vehicles and following an investigation by H&S, they were criminally prosecuted and received a prison sentence.
  • A charity trustee committed to purchasing an IT system without the authority to do so. The charity did not have funds to pay and the IT company claimed under the trustee indemnity cover for funds alleging breach of fiduciary duty.
There is no real rule about how much cover you require but limits start from £100,000 and it is advised to take as much cover as can be afforded.  If you are a trustee of a charity then make sure your good intentions don’t turn into a nightmare by making sure you have adequate charity trustee indemnity insurance in place.

For further information and for a free, quick quote, call us during office hours on 0800 046 1446.