Trustees Indemnity

Trustees Indemnity insurance is arranged to protect trustees in the event that a trustee or official commits a “Wrongful Act” - a breach of trust or duty – as defined in the Charities Act 2006. In such circumstances, each Trustee is liable up to the extent of his or her personal wealth and Trustees Indemnity insurance provides protection for this.

Examples of incidents that would be covered under a Trustees Indemnity Insurance policy are as follows:

Claim for misuse of Trust Funds

Following an investigation by the Charity Commission, it was declared that the trustees named had illegally gained payments from the trust by use of another trading company of which they are directors. The Charity Commission has stated that there exists a conflict of interests and that these salaries and dividends must be returned, and the trust be re-structured. The claim itself was for reimbursement of legal fees incurred. However as the claim did not directly stem from a Wrongful Act, but rather from the error of the solicitors involved in the formation of the trust, the claim would not be upheld. However, solicitors’ fees and investigation costs were paid.

Claim for alleged Breach of Authority

A claim was made against a trustee by one of the charity’s employees. Before the charity ceased operating the trustee had indicated that employees would receive an enhanced redundancy payment, which was in breach of his authority. As a result, several employees had made financial decisions based on that statement, and hence ran up costs to cancel these arrangements.

Claim for alleged Denial of Access

A claim was made against the trustees as they had sub-let a section of their premises to another organisation. This had been done without consultation to the landlord and broke the conditions of the charity’s lease on the property, and subsequently he ordered the eviction of the sub-tenants. The evictees brought a successful claim against the trustees for denial of access. Over £12,000 was paid out under the policy.

Claim for breach of Trust

A claim was made against a Trustee of the Charity by the other Trustees, alleging that the defendant had broken the Governing Documents of the Trust in receiving fees, and making improper investments. A subsequent Charity Commissioner’s investigation and the costs of recovering fees and investments amounted to £52,000

Claim for alleged Discrimination

An interviewee for a position at the charity alleges that he was unfairly discriminated against due to his race, and that the position was given to someone less suitable. Considerably defence costs were incurred in defending the allegation

Norris & Fisher are happy to answer individual queries on Trustees Indemnity Insurance. Please telephone us on 01794 518855.

If you would like a quotation, please complete our Enquiry Form and return it by post, fax or email. We will respond immediately we receive a quotation from insurers – usually on the following working day.