If a charity under insures the value of a building or contents the insurance company will only pay out a proportion of the loss and the charity will have to pay the balance. In some circumstances the insurance company may refuse to pay. So if you insure your office contents for £7,500 but it costs £10,000 to replace them after a fire they might only pay 75% of £7,500 which is £5,625, arguing that the risk was larger than you declared.
Several brokers offer bundles of insurances for charities. Risks like libel may be included at no extra costs with public liability, employer’s liability and office contents insurance if they are all brought together.
If there are exclusions in the policy – statements about what is not covered – you should consider them very carefully, in the context of how appropriate the insurance is for your situation. Be sure that the insurance you are buying is right for your organisation’s unique situation. A different insurance company might not include specific exclusions so may be able to offer better value to your charity even if their price is slightly higher.
Some policies will expect the charity to pay for the first part of any claim. The amount might be in the region of £100 to £500.
It is worth getting quotes from more than one broker or insurance company. Sometimes exclusions can save several hundred pounds. Organisations that employ solicitors or barristers typically pay more for professional indemnity insurance. So if you do not employ solicitors or barristers then pick a policy that excludes them from cover.
Insurances bought from different companies or brokers can overlap. The needs of your charity are likely to change over time. It could save money and reduce risk if you review your insurances at least once a year.
If your charity has a connected trading company or subsidiary then the trading company will be an entity in its own right and will normally need its own insurances.
Some funders insist that you have certain insurances. Local authorities often require charities to take out public liability insurance. Check insurance requirements when you apply for funds and when you read the funding agreement.
You must disclose to the insurer all material facts of which you are aware. Inform the broker or insurance company of any events that are likely to affect the level of risk. This would include taking on more employees or volunteers, or a break in even if you do not claim for loss resulting from the break in.
Before taking out insurance consider the following:
- Is the insurance compulsory or required to meet the needs of funding agreements?
- Is the insurance necessary or prudent? Does the person recommending it understand the charity’s activities or are they seeking to earn commission by selling insurance that you do not need?
- What risks are covered by the policy?
- What risks are excluded?
- Does the quotation cover everything?
- Does the quotation cover more than is needed?
- How much is the premium, do you have a second quotation from another broker?
- Has the proposal form been completed in full? (The doctrine of utmost good faith requires that the insured tells the insurer of all material facts that the insured is aware of.)
- What are the conditions of the policy? For example, do door locks need to be of a specific standard?
- Renew the insurance on time. Put a reminder in your diary/planner
- Promptly advise insurers of any significant change in the risk
- Notify insurers of all claims under any insurance policies
- Review insurance once a year, typically in January if policies renew in April so you have enough time to get alternative quotations
- Double or overlapping insurances
- Level of cover
- Risks covered
- Risks faced by the charity
AON Limited, Capital House, 1 Houndwell Place, Southampton, Hampshire, SO14 1HU. 0845 7402003
Independent Advice Services, 12th Floor, New London Bridge House, 25 London Bridge Street, London SE1 9ST. 020 7407 4070
Keegan & Pennykid (Insurance Brokers) Ltd. 50 Queen Street, Edinburgh EH2 3NS. 0131 226 3811 www.Keegan-pennykid.com
Last updated: Mon, Mar 31 2008 - 03:12:23 PM
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