Are charities over insured?

Nick’s lead article in September’s Charity Finance magazine explores the subject of insurance for charities. It concludes with the importance of charities ensuring that they have applied as rigorous and clear process to determine the insurance cover required as they would apply to any other decision. There is a real danger of viewing insurance as a ‘necessary evil’, resulting in a level of inertia which means annual renewals are nodded through with minimal thought or scrutiny. This list isn’t intended to be exhaustive, and good insurance providers will prompt regular reviews, but trustees may want to consider these factors as part of an insurance review process:

1. Are there any activities or assets in the policy schedule that are no longer applicable? I have known charities still insuring properties that had been disposed of many years previously and if there have been significant reductions in, for example, the workforce, then that could affect the cover needed.

2. Are there any activities or assets missing? The same argument exists for newly acquired property or new/expanded activities.

3. Are there any specifically high-risk activities that we need to pay particular attention to; either because an incident is more likely, or because if one occurred it could have a disproportionate impact?

4. Are there any areas we are currently insuring where the risk of claim to potential cost equation raises doubt about whether insurance is really the worthwhile option?

5. How well does our insurer understand our sector/work? Most of us could name the top 2 or 3 names in charity insurance (they may be advertising in this issue!), but if we use a broker are we sure that they are not saving money by using a company that will, for example, deny all understanding of volunteers if a claim is raised?

6. Are we sure that the charity can continue to serve its beneficiaries effectively with any new exclusions that apply?

7. Is there a clear plan and means of communicating changes, including new exclusions. E.g. Raising the minimum age of insured drivers and not communicating that change leading to the potential for volunteers to unknowingly being uninsured.

8. If the charity either hires out its property to other users, or hires space from someone else are both parties clear on whose insurance policy has to cover public liability, damage etc.

9. If the charity handles cash, are you confident procedures can be implemented that fulfil those required to obtain cover for that?

10. Is there specific professional advice that it is worth covering via insurance, such as legal fees or the cost of defending employment disputes?