Charity Insurance | Social Enterprises | Voluntary Organisations | Community Groups

Charity PI

  • Sometimes known as PI Insurance, although confusingly, PI is also used to abbreviate ‘personal injury’ in the insurance world
  • Professional Indemnity cover is almost always offered on a ‘claims made’ basis. This means that the insurance protection is only valid for claims bought during the duration of the policy. Claims made after the policy term expired, even for negligent services for advice that occurred in the policy period, will not be met.

Charity Professional Indemnity Insurance

Charity Professional Indemnity Insurance can protect your non profit organisation if a claim is bought against the organisation by a claimant alleging that they have suffered a loss from incorrect advice they have received from the charity. These costs would not be covered under the liability insurances charities often purchase separately.

A professional indemnity insurance policy protects your charity from compensation for correcting the error and any associated legal costs.

Charities that need professional indemnity protection are usually those that give advice, handle intellectual property or hold data, particularly personal data. Essentially if your charity gives professional advice it is possible that it might cause a loss for the recipient and professional indemnity insurance might be an appropriate protection for your charity.


Marie-Small.jpg

Marie Hallowes

Operations Director

Professional Indemnity Insurance is an area where many charities would benefit with specialist insurance advice.   Charities face risks ranging from handling data to negligent advice, defamation, copyright and more.

Marie Hallowes, Operations Director

More About Charity Professional Indemnity Insurance

Many charities have risks that professional indemnity insurance could help protect. Some charities provide an expert service or advice. Most handle client or volunteer data, sometimes of a highly confidential basis. While professional indemnity insurance policies vary from provider to provider, it might be appropriate for your charity to consider some of the following risks:

Negligent Advice – Many charities provide training, consultancy and general advice to their clients which if proved negligent, could be the cause of a civil action against the charity.

Breaches of Confidentiality – An example might be releasing data into the public domain accidentally, perhaps losing a data stick or emailing data to the wrong party.

Defamation – Claimants for defamation are seeking financial redress for something your charity has said that is untrue and that they feel has harmed their reputation. Claims for defamation are nothing new, examples date to the thirteenth century. Damages for defamation, which are set by a jury, tend to be higher that those for personal injury.

Some professional indemnity policies will also include cover for copyright issues, document loss, dishonesty of employees, fidelity cover, accidental breach of confidence.

One Claim / Aggregate Cover

A charity professional indemnity insurance product can be sold on a one claim or an aggregate basis.

Any one claim only caps the total value of a single claim to which the insurer is liable. For example a £500,000 ‘any one claim’ policy will meet any amount of claims to that cap per claim.

An aggregate policy caps the total liability of the insurer. Thus a £500,000 aggregate policy caps the maximum an insurer will payout for all claims made under the policy. Therefore if four separate £150,000 claims are bought against such a policy, the last £100,000 of the £600,000 will not be met by the insurer.

Charity Professional Indemnity Insurance

For our blog about charities, advice and insurance, follow the link – It covers some of the difference between charity public liability insurance and professional indemnity cover for charities.

We have also written about the increasing professional indemnity cover requirements that are being placed on charities and community groups by local authorities in some contracts.

QBE released a ten point guide to Professional Indemnity, it was not specifically written for charities and social enterprise organisations but is still a useful guide.  We summarised some main points in our blog but the full pdf can be found here.

You can also read our article on charities that provide professional advice.