Do you need to consider Professional indemnity insurance?

When a charity provides a professional service, they could be held legally liable for any financial loss, injury or damage that occurs if the charity is alleged to provide inadequate advice or insufficient charitable services.

Professional Indemnity often referred to as PI, can cover any legal costs and expenses incurred in your defence against claims, as well as any damages or costs incurred as a result of following such negligent or erroneous advice or service.

The range of professional advice extends from local civic societies and other local charities that provide sign-posting services (i.e. directing people to a source of specialist information) right up to providing specialist legal or financial advice.

Professional advice can be split into a number of main areas.

• The “signpost” type organisations are usually considered to be low risk. The advice they provide is usually quite generic and is usually accepted as the standard response. They will normally direct service users to more specialist advisors who will be able to guidance which addresses the service users’ individual needs. Quite often the service users will not be paying to receive this advice, which reduces the chances of a successful claim.
• Organisations that provide more bespoke advice and especially where that advice is provided for a fee, are an increased risk. Insurers may wish to know how this is provided, as well as what specific services they are providing This may include advice on debt management, pregnancy/abortion, careers advice, grief counselling etc. The range of possibilities is potentially very wide; however, each organisation should ensure that they stay within its own area of expertise. Insurers may want to know about the qualifications and experience of those providing the advice too
• At the higher end of the risk scale are organisations that provide regulated activities such as legal or financial advice. These should only be provided by a qualified practioner and may require a more specialist insurance cover in place. It’s important that you let your broker know if you will be providing any regulated activities.
• Organisations which provide hands-on care and treatment or more specialised advice e.g. drug/alcohol rehabilitation advice may also need some specialist PI insurance. Medical malpractice risk is usually excluded as part of a professional indemnity cover, so this may also need to be arranged separately.

Charity trustee or not-for-profit organisation’s management liability insurance

There are pressures on all organisations to stay focused on priorities and have a clear direction on the overall aims of the business. Charities and not-for-profit organisations are no different. The trustees, committee members and/or directors of your charitable organisation are often the decision makers and if a mistake is made, they could be held responsible for financial losses incurred  by your organisation or third parties. Trustee’s liability insurance protects your organisation and your trustees from the costs of legal disputes and investigations, and any damages awarded in the event that they are negligent in acting as a trustee, director or member of a management committee.

Top Tips to reduce management liability risk:

• create a clear business plan that sets out the aims, objectives and policies of the organisation
• create financial plans and budget controls
• use career plans and targets
• monitor financial and operation performance
• ensure clear two-way communication with beneficiaries and fund providers

Here at Aviva we offer cover to protect individuals for personal liabilities incurred while acting as a trustee or committee member arising from a variety of claims, for example failing to act in a charity or organisations best interests as a result of lack of management or governance.

Need some insurance guidance?

This article has been kindly contributed by Aviva’s charity insurance brokers BHIB Insurance, Allied Westminster, and charity specialist MGA, aQmen Underwriting

Are you looking for specialist insurance or need advice on your charity’s requirements? Our Aviva products are available via insurance brokers across the UK. If you already have an insurance broker, please contact them for guidance and to get a quote.

If you need to find a broker, this look up tool from the British Insurance Brokers’ Association (BIBA) will help you locate one local to you.

Alternatively, we work with three brokers who specialise in charity insurance products. Please feel free to contact them directly to receive their expert advice.

• BHIB Insurance Brokers
• aQmen Underwriting
• Allied Westminster VillageGuard (specialist insurance for rural Village Halls)