What Is Charity Insurance?
Charity insurance is a specialist package of covers designed to protect registered charities, voluntary organisations, community interest companies (CICs), and not-for-profit bodies against the range of risks they face in delivering their charitable purposes. The sector presents a distinctive combination of exposures: public-facing activities, a workforce that often includes volunteers as well as paid staff, fundraising events, and governance obligations to the Charity Commission.
A typical charity insurance arrangement combines public liability, employers' liability, trustee liability (also known as trustees' indemnity insurance), property cover, and personal accident cover for volunteers. The specific covers required will depend on the nature of the charitable activities, the size of the workforce, whether the charity owns or occupies premises, and whether it organises public events or fundraising activities.
Charity Commission and Governance Obligations
Charities registered in England and Wales are regulated by the Charity Commission under the Charities Act 2011. Trustees have a legal duty to act in the best interests of the charity and to protect its assets. The Charity Commission's guidance on risk management (CC26) recommends that trustees identify and manage the key risks facing their charity, which includes ensuring adequate insurance arrangements are in place.
Whilst the Charity Commission does not prescribe specific insurance products or limits, the Charities Act 2011 (Section 189) expressly permits charities to purchase trustee indemnity insurance from charitable funds, provided the charity's governing document does not prohibit it. Larger charities (those with annual income above £250,000) are required to include a risk management statement in their annual report, which should address insurance arrangements.
Legal Requirements
Charities are subject to several statutory obligations that make certain insurance covers legally required or effectively mandatory in practice:
- Employers' liability insurance — legally required under the Employers' Liability (Compulsory Insurance) Act 1969 for any charity that employs paid staff, with a minimum cover of £5 million. The requirement applies to paid employees but not to volunteers.
- Motor insurance — required if any vehicles are used in connection with charitable activities, including minibuses used for beneficiary transport.
- Lease or mortgage requirements — most commercial landlords and property lenders require buildings insurance and public liability as conditions of the agreement.
- Grant and funding conditions — many grant-making bodies and local authorities require charities to hold adequate public liability insurance as a condition of grant funding or service contracts.
- Event licensing — charities organising public events may be required to hold public liability insurance as a condition of the event licence issued by the local authority.
Key Covers for Charities
A comprehensive charity insurance policy typically includes the following core covers, though the specific structure will depend on the nature of the charitable activities and the size of the organisation:
| Cover | What It Protects | Typical Limit |
|---|---|---|
| Public Liability | Claims from members of the public, beneficiaries, or third parties for injury or property damage | £2m – £10m |
| Employers' Liability | Claims from paid employees for work-related injury or illness | £10m (statutory minimum £5m) |
| Trustee Liability | Claims against trustees for alleged wrongful acts, errors, or omissions in their governance role | £250,000 – £2m |
| Buildings & Contents | Damage to charity premises and contents from fire, flood, theft, and other perils | Full reinstatement / agreed sum insured |
| Personal Accident (Volunteers) | Accidental injury to volunteers during charitable activities | Agreed benefit schedule |
| Professional Indemnity | Claims arising from alleged negligence in the delivery of charitable services (e.g., advice, counselling, care) | £250,000 – £1m per claim |
| Legal Expenses | Employment disputes, regulatory investigations, and contract disputes | £100,000 – £250,000 |
| Money Cover | Loss of cash, cheques, and fundraising proceeds in transit or on premises | Agreed sum insured |
Trustee Liability Insurance
Trustee liability insurance — sometimes referred to as trustees' indemnity insurance or charity directors' and officers' insurance — is one of the most important covers for any charity. It protects individual trustees against claims arising from alleged wrongful acts, errors, or omissions in their governance role, including decisions about strategy, finance, employment, and the management of charitable assets.
Without this cover, trustees face the risk of personal financial liability if a claim is brought against them. This is a significant deterrent to trustee recruitment, particularly for larger charities where the financial and reputational stakes are higher. The Charities Act 2011 expressly permits charities to purchase this cover from charitable funds, making it one of the few insurance products that can be funded directly from the charity's resources without requiring a separate governance resolution.
Trustee liability policies are typically written on a claims-made basis. Charities should ensure that run-off cover is arranged if a trustee retires or the charity winds up, to protect against claims arising from past governance decisions.
Cover for Volunteers
Volunteers are the lifeblood of the charity sector, but they present a distinct insurance challenge. Employers' liability insurance is a legal requirement only for paid employees — it does not automatically extend to volunteers. However, charities have a duty of care to their volunteers, and a claim from an injured volunteer could expose the charity to significant uninsured liability.
Most charity insurance policies can be extended to include volunteers under the employers' liability section, or a separate personal accident policy can be arranged to provide a benefit schedule for volunteers who suffer accidental injury or death during charitable activities. Charities should confirm with their insurer or broker whether volunteers are covered and under which section of the policy.
Public Liability for Events and Fundraising
Many charities organise public events — from community fairs and sponsored walks to gala dinners and concerts — as part of their fundraising activities. These events create significant public liability exposure: members of the public attending the event, third-party property at the venue, and the activities taking place all need to be covered.
A standard charity public liability policy may not automatically cover all types of events, particularly those involving large crowds, fairground rides, fireworks, or other higher-risk activities. Charities should notify their insurer or broker of any planned events and confirm that adequate cover is in place. For one-off or particularly large events, a standalone event insurance policy may be more appropriate.
Event cancellation insurance is also worth considering for charities that have committed significant expenditure to an event that could be cancelled due to adverse weather, venue unavailability, or other unforeseen circumstances.
Property and Contents Cover
Charities that own or occupy premises — whether a dedicated charity shop, community centre, office, or service delivery location — require buildings and contents insurance. The buildings sum insured should reflect the full reinstatement cost of the property, not its market value, and should be reviewed regularly to account for building cost inflation.
Charity shops face particular risks around stock, cash handling, and public access. A specialist charity retail policy can provide cover for donated stock, cash in transit, and the liability exposures associated with a retail environment. Standard commercial property policies may not adequately address the specific characteristics of charity retail operations.
What Affects the Cost?
The premium for charity insurance is influenced by a range of factors that underwriters assess when pricing the risk:
- Nature of charitable activities — charities delivering care services, working with vulnerable beneficiaries, or organising large public events are rated as higher risk than those with purely administrative functions.
- Annual income and turnover — larger charities with higher income and more complex operations attract higher premiums.
- Number of employees and volunteers — employers' liability and personal accident premiums are linked to the size of the workforce.
- Premises — charities owning or occupying multiple premises, or premises with specialist uses (e.g., care homes, day centres), attract higher property premiums.
- Claims history — a history of liability or property claims will increase the premium and may affect the availability of cover.
- Governance quality — charities with robust governance arrangements, documented risk management processes, and up-to-date Charity Commission filings are generally viewed more favourably by underwriters.
- Event activity — charities organising regular public events should declare these at inception to ensure adequate cover is in place.
Next Steps
Charity insurance is a specialist area that requires an insurer panel with experience in the not-for-profit sector. Standard commercial insurers may not have the appetite or expertise to underwrite charity risks appropriately, and the consequences of inadequate cover — given the governance obligations to the Charity Commission and the vulnerability of many beneficiaries — are significant.
Focus Insurance works with specialist insurers who understand the charity sector and can structure cover to meet Charity Commission governance expectations, grant funding requirements, and the specific risk profile of your organisation. To discuss your requirements, contact our team during business hours (Monday to Friday, 9:00am to 5:00pm).
Focus Insurance Services is authorised and regulated by the Financial Conduct Authority (FCA No. 717691). All cover is subject to underwriting acceptance and policy terms and conditions. This guide is for general information only and does not constitute advice. Cover requirements will vary depending on individual circumstances.
Important Disclaimer
This article is for general information and educational purposes only. Policy terms, conditions, and exclusions vary. For a personal recommendation tailored to your circumstances, please speak to one of our brokers.
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