The analysis, which was based on data from an independent survey, shows that just under 20% of charities do not have trustee indemnity insurance, which covers the costs of defending trustees against legal action for discrimination, misconduct or wrongful acts.
Without this insurance, trustees can be exposed to the full force of a claim and be liable to pay the costs of defending themselves in court, plus any compensation payouts, from their own personal finances. While many of the high profile, headline-grabbing court cases involving trustees are related to large organisations, Markel is calling on small charities to recognise the risks they face and how they can be affected by a claim.
Markel’s claims manager, Mike Richardson, said: “The research suggests that a lot of trustees don’t know the ramifications, and potential cost, of legal disputes that could arise due to their position. Many trustees put their personal funds, even their homes, at risk by not having adequate insurance to protect them. They can become embroiled in legal disputes through no fault of their own or directly due to the actions of a fellow trustee.
“Disputed sales of land owned by sports clubs, aborted building projects and dishonesty by other trustees have all led to investigations and litigation where every trustee has needed their own representation. The worry and financial implications can be crippling and given the relatively small cost to take out cover all this could be avoided by small charities.”
Markel’s Charity Insurance Decision Tree aims to help trustees and their charities better understand the covers available to protect their organisation and can be viewed on the Markel website (http://www.markeluk.com/