Trustee Indemnity Insurance

Until recently, charities usually needed the Charity Commission’s approval to buy indemnity insurance for their trustees. Trustees no longer need an explicit power from the Commission or from their governing document before buying such insurance, however, there are certain conditions:

• Trustees must satisfy themselves that it is in the charity’s best interests to buy indemnity insurance with the charity’s money.
• The charity’s governing document must not expressly prohibit the purchase of indemnity insurance, but trustees can now buy indemnity insurance where the governing document simply states a general prohibition against personal benefit.

Limitations: Any indemnity insurance policy must exclude some specific areas, mainly in relation to covering costs and fines from trustees acting in bad faith.