A charity’s duty to have liability insurance

Every employer has a legal requirement to have employers’ liability insurance for employees based in England, Scotland or Wales.

In England, there’s no legal requirement to have employers’ liability insurance to cover employees who are based abroad. However, if you have employees based in other countries, you should comply with the relevant countries’ legal requirements.

There is also not a legal requirement to have public liability insurance, which covers organisations for claims made against them by members of the public or other businesses (but not claims by employees). But you might want to consider such insurance if your organisation hosts an event, for example, or owns or occupies land or buildings(this would protect against a claim from someone who was injured at the event or whose property was lost or damaged on your premises).

Charities that own or operate motor vehicles are also required to have insurance against third-party injury and property damage. If you own a minibus, you’ll need to take out further insurance. It’s also important to bear in mind that if a trustee, employee or volunteer uses their own vehicle for a charity’s business, the charity must ensure that the owner’s insurance covers this use.

When an organisation takes out insurance, they must ensure that they give the insurance company clear information about the relevant risks.

Duties of charities to have insurance

This act requires requires employers to insure against their liability for personal injury to their employees based in England, Scotland or Wales.

Reference: Employers’ Liability (Compulsory Insurance) Act 1969

Charity Commission guidance on charities and insurance.

Reference: CC49: Charities and insurance

Duty to make a fair presentation of risk to insurers

This act requires the person or organisation seeking insurance to make a ‘fair presentation’ of risk to their prospective insurer. This means charities must disclose everything they know, or should know, about potential risks.

Senior management and those responsible for the insurance (eg brokers) will need to share what is available to them from a ’reasonable search’ of information available.

Information should be shared with insurance companies in a ‘reasonably clear and accessible’ way.

The insurance company can seek various remedies when they do not have a fair presentation of risk, including not honouring the insurance contract. Much depends on whether this was a deliberate or reckless failure to make a fair presentation.

Reference: Part 2, Insurance Act 2015