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All voluntary organisations need to take out insurance. Whatever you do there is a risk and we live in a world where people and organisations are increasingly likely to take your charity to court. Terrible things do happen. Imagine a charity taking children to the seaside and one child being injured running across the road. It could be claimed that the charity failed to provide adequate supervision.

Many individuals can get free advice from Citizens Advice Bureaux and similar agencies. Firms of solicitors now advertise on television offering no win no fee so it may not cost an individual any money to take your organisation to court. Many firms take out legal insurance to meet the cost of suing other organisations. It is very easy for claims to be made against your organisations and if it is not insured the trustees may be personally liable and have to pay the damages out of their own pockets. Trustees do not personally benefit from being trustees so it is reasonable for a charity to take out all the insurances that are needed to protect them.

A charity with an income of £100,000 might be spending £800 a year on insurance.

A very small charity might have to spend £300 a year on insurance.

Compulsory insurances

Some insurances are compulsory. That means the law states you must have them.

Employer’s liability

If you employ staff you must by law take out employer’s liability insurance. This should cover liability for injury or disease sustained by your employees arising out of their employment. The cover must be for at least £2 million and the insurance certificate must be displayed on the employer’s premises. Volunteers can sometimes be classified as employees so you should ensure that they are covered by the policy.

Motor insurance

If a voluntary organisation owns or hires a vehicle then a motor insurance policy must be held by the organisation. If the organisation’s employees use their own vehicles on the organisation’s business or activities then the employee must check with their insurer that business use for their employer is covered. The charity may pay an extra premium incurred by the employee; normally you would not have to charge PAYE tax on this benefit. The charity might insure the employee’s vehicle under the employer’s policy. Normally, some PAYE tax would be paid by the employee on this benefit. We suggest that you ask to see employee’s motor insurance policies to check that business use for their employer is covered.

Some brokers can cover the risk to your employee and volunteers and No Claims Discount. So if they have an accident whilst on the charity’s business and lose the discount, they receive a payment from the insurance company.

Optional insurances

These are insurances which you are not required by law to have, but which you may think it wise to take out.

Public liability insurance

Nearly all charities need this. It covers personal injury, death and damage to property caused by the activities or negligence of its employees and volunteers. So if a member of the public or a client is injured as a result of your activities in most cases you will be covered. However, note that you may need product liability insurance if you are manufacturing or selling goods. You may need medical negligence insurance if you are undertaking activities such as getting people in and out of the bath (bathing schemes), or in and out of bed (respite care projects). Public liability insurance also covers death, injury and damage to property arising from ownership, occupation or management of premises.

  • Claims that could be covered by other types of policy such as motor insurance, employer’s liability, professional negligence, or product liability, are excluded from cover in public liability policies
  • Liabilities established through contracts between the charity and other organisations or people are not covered

Personal accident

Covers accidents that could not be claimed for under public liability insurance, that is accidents that are not a result of the charity’s negligence. This is often included in a bundle of other insurances.

Professional indemnity insurance

If your organisation provides advice, publishes advice in a newsletter, on a website, or runs training courses, then this policy should cover claims for loss arising from bad advice. More broadly it covers the risk that a supplier of services may not comply with its legal duties. So if a charity negligently performs its duties under a contract and incurs a liability to an injured party, then, professional indemnity insurance could cover the risk.

Medical negligence

If your staff or volunteers hold or administer any types of drugs for clients or people in their care then you should check to see if you need this type of insurance. If you lift people out of bed or into and out of baths this cover may be needed. The policy should pay if somebody is injured or becomes ill as a result of the actions of your volunteers or staff.

Product liability insurance

Consider this insurance only if your charity sells or manufacturers goods. The policy should cover liabilities arising from death, personal injury or damage to property caused by the products sold by the insured.

Legal expenses insurance

There are a range of insurances covering various types of legal costs. They include protection if you are sued and the costs of suing other organisations if you have a genuine claim or grievance against them. Normally you cannot make a claim in the first six months of this type of insurance.

Employment disputes insurance

This is a specialist type of legal expenses insurance. It covers costs relating to industrial tribunals and compensation awards made by tribunals. Compensation for some claims such as racial discrimination is unlimited. Claims can be made maliciously by disgruntled employees and if you do not have the resources to defend your charity they can be successful. Defending a claim without proper professional support can involve an enormous amount of work and totally distract the management of a charity from achieving its goals. This type of insurance means you should have support from experienced professionals. It could reduce the risk of malicious claims because claimants may back off when they realise you are defended by an insurance company. The insurance company will require that you inform them immediately a problem arises and follow the advice of their staff exactly. You may feel that some of the management decision making of the charity has been shifted to the insurance company, but they should be picking up the bill if compensation eventually has to be paid. Typically you cannot make claims in the first six months because the insurance companies do not want to meet the cost of existing disputes. They are covering new disputes and grievances.

Libel and slander

If your staff, volunteers or trustees publish lies about individuals or other organisations and your charity is sued this insurance should pay out. It often includes slander so could be useful if someone is rude about the local council.

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Last updated: Mon, Mar 31 2008 - 03:10:55 PM

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