With this type of cover in force, trustees are indemnified for damages and legal expenses for which they are legally liable in capacity of trustee, committee member, director or officer by reason of any “wrongful” act that they commit in that capacity such as breach of duty or breach of trust. Without the cover individuals can be held personally liable to make good any losses suffered as a result of his or her own act of omission and those of his or her fellow trustees.
In some cases the nature of the organisation will be such that there will be the real possibility of personal liability, for example where there is active fundraising, the organisation of events, counselling, assistance or the provision of information. Whilst trustees may exercise due care in carrying out their duties, an action carried out in good faith may still backfire, causing a loss to the Organisation and the Trustees may be held to be liable.
Regardless of the legal status of the Charity, the principal benefit of the Insurance cover as with most liability policies, is the fact that the cover includes Legal Defence costs. Just because someone accuses you of wrongdoing doesn’t necessarily make it a fact and some investigation will be needed to establish the facts of the case. The costs incurred can be substantial even if you can prove that there was no case to answer.
The cover differs from other Insurances in that it is usually written on a “claims made” basis. This means that the cover will operate provided that it is in force when a claim is intimated and that there was cover at the time that the advice or information was given. A claim could be made at almost any time after the provision of the advice, so you need to be aware that trustees indemnity cover needs to run on for several years after you cease to provide advice or information.
For further information or advice about Trustees Indemnity insurance or to get a quote, please contact us