Charity trustee indemnity insurance protects trustees personally against liability for something done in that role. Charity law allows a charity to buy it from its own funds subject to conditions, which makes this one of the few insurance purchases where the decision itself has to be documented properly.
What it covers
A trustee's personal liability for a breach of trust or duty, and the cost of defending an allegation. It does not cover fines, deliberate wrongdoing, or a trustee who knew they were acting outside their powers. Those exclusions are required rather than chosen, and a policy without them could not lawfully be bought from charity funds.
Paying for it from charity funds
Permitted where the governing document does not prohibit it and where the policy contains the required exclusions. Trustees should satisfy themselves of both, record the decision in the minutes and review it periodically. Buying it improperly is itself a breach of duty, which is the small irony at the centre of this product.
What it sits beside
The charity's own public liability, employers liability and, where it advises or delivers professional services, professional indemnity. Those protect the charity. Trustee indemnity protects the people, and a charity holding only the first set has left its volunteers personally exposed.
What to check before buying it
Read the governing document for any prohibition. Check the policy contains the exclusions charity law requires. Consider whether the charity is incorporated, because a charitable company may be better served by a directors and officers policy covering both roles. Then record the decision and the reasoning in the minutes, which is the step most commonly skipped and the easiest to do.
Questions people ask about charity trustee indemnity insurance
Can a charity pay for trustee insurance?
Yes, subject to the governing document not prohibiting it and the policy containing the required exclusions. Record the decision in the minutes.
What is excluded?
Fines, deliberate wrongdoing, and acting knowingly outside your powers. Those exclusions are required rather than optional.
Is it the same as the charity's own insurance?
No. The charity's policies protect the charity; trustee indemnity protects the individuals serving on the board.