We recently ran a poll on our Twitter page asking our audience what they believed is the most important factor to being a trustee. The results were interesting, with the vast majority (73%) choosing a diverse blend of skills, followed by a good level of experience (18%) and succession planning (8%). Another popular suggestion was a strong interest in, or passion for the cause.
Something that often holds people back from becoming a trustee is the level of responsibility that comes with it, and the fear of being held personally liable if something was to go wrong. It is true that the biggest responsibilities and risk lies with the trustees, who have a personal liability that directors do not have (of course, directors are not immune to risk, but in those cases it would be bound up with the organisation’s liabilities).
Having the correct protection in place in the form of trustee indemnity insurance helps to protect both the charity and its trustees, but why exactly would it be needed? Trustees have a number of responsibilities including a duty of care and skill, to ensure that the organisation complies with Charity Commission and other regulations, and managing charity finances. The subsequent risks associated with each of these can be linked to data protection, regulatory investigations, and actions by Local Authorities, customers, other stakeholders and current/former trustees.
It is also worth considering that in the current economic climate, a charity may decide to merge with another or may even be forced to close. Having cover in place may reassure trustees that should any allegations of wrong doing come in from stakeholders, there will be an insurance indemnity in place along with access to specialist insurance claims support.
Of course, there is no legal requirement to take out Trustee Indemnity insurance and if you have trustees wealthy enough to defend allegations and awards personally, and if the charity itself could withstand the unexpected impact, then it may not be required, however it is something we strongly recommend you consider. There is much more information on Trustee Indemnity Insurance here on our website, or if you have any questions please get in touch with us.