Trustee indemnity insurance protects the individuals who serve as trustees against personal liability for something done in that role. It is a different animal from the insurance a charity buys for its activities, because the person protected is the volunteer rather than the organisation, and charity law has something to say about who may pay for it.
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 acted dishonestly. It sits alongside the charity's public liability, employers liability and professional indemnity rather than replacing any of them.
Paying for it from charity funds
Charity law permits a charity to buy trustee indemnity insurance out of its funds subject to conditions, including that the governing document does not prohibit it and that the cover excludes certain liabilities. Trustees should check the position and record the decision, because buying it improperly is itself a breach.
Who actually needs it
Trustees of charities, directors of small companies limited by guarantee, and the volunteers running resident management companies and share of freehold blocks. In each case ordinary people take on legal duties for no reward, and the cover is what makes those roles reasonable to accept.
How it relates to directors cover
Directors and officers insurance is the same idea for company directors, and for a charitable company the two overlap. Where a charity is incorporated, one policy commonly covers both roles. Where it is not, trustee indemnity is the relevant product.
Questions people ask about trustee indemnity insurance
Who does trustee indemnity insurance protect?
The individual trustees, against personal liability for a breach of trust or duty, plus the cost of defending an allegation.
Can a charity pay for it?
Subject to charity law conditions and the governing document, yes. Trustees should check the position and record the decision.
Does it cover dishonesty?
No. Deliberate wrongdoing, dishonesty and fines are excluded. It answers for honest mistakes in a demanding role.
Is it the same as directors and officers cover?
The same idea for a different legal role. For an incorporated charity one policy commonly covers both.