This insurance provides cover for damages, the charity’s own expenses and any third party expenses in the event of an allegation of a ‘wrongful act’, error or omission, misstatement or breach of duty against either the charity or its’ board, trustees, directors or employees.
Life for Charity and other non-profit organisations can be as complicated as life in the commercial sector with many potential sources of claims against the Charity and its’ trustees, directors and employees – employee rights and obligations including race, sex, age and disability discrimination, accusations of mismanagement, Health & Safety prosecutions, libel & slander, plagiarism and copyright infringements, dishonesty of directors or employees, insolvency and environmental responsibilities.
Where the Charity gives any form of professional advice or information, for example financial, counselling, general management or career advice, it could be faced with a claim for errors and omissions in the advice given.
The insurance can be extended to cover the Charity’s financial loss due to the dishonesty of its’ trustees, directors and employees. Workplace fraud is a major concern with over 75% of fraudulent incidents being committed by individuals within the organisation.
Trustees, directors and employees have personal duties for the management of the Charity. Being neglectful or ignorant of these duties is no defence at law and could lead to a breach of duty for which they could be held personally liable. Further, the Charity may have a contractual obligation to reimburse the trustee, director or employee for their defence costs resulting in an unexpected ‘hit’ on charitable funds which can, in the worst case scenario, leave the Charity insolvent.
It can also be an impediment to a Charity attracting the calibre of trustees that it desires if individuals believe that they could be held personally liable if things go wrong.
Employment Practices -
A young persons’ charity dismissed one of its’ directors following his Police caution for gross indecency in a public place, stating that his offence had a direct bearing on his employment. The charity incurred defence costs in excess of £ 30,000 before an Employment Appeal Tribunal finally rejected his unfair dismissal claim.
Employee Fraud -
A charitable school for handicapped children discovered misappropriation of funds totalling £ 178,000. The funds had been siphoned off by a member of staff over a period of 13 years.
Following publication of an article, a charity was sued for defamation by another charity with similar objectives. The matter was finally settled out of court but not before significant legal fees had been incurred.
You do not have to be a client of Performers to make use of our knowledge. If you have any insurance related queries do not hesitate to call our team on 01708 860999 or fill in our contact form