UPDATED INFORMATION FOR CHAPTER 20:
VOLUNTARY SECTOR LEGAL HANDBOOK
This page contains information that has appeared on Sandy Adirondack's legal update website for voluntary organisations at www.sandy-a.co.uk/legal.htm. For current updates, including potential changes that are in the pipeline, see the legal update website.
These websites for each chapter update
the 2nd edition of The Voluntary Sector Legal Handbook by Sandy Adirondack and James Sinclair Taylor (Directory of Social Change, 2001). The websites are not intended as a comprehensive update and should not be treated as such.
To order a copy of The Voluntary Sector Legal Handbook, print out the order form at www.sandy-a.co.uk/bookserv.htm or send an email order by clicking
. It costs £50 for voluntary organisations or £80 for others, plus 10% p&p. We expect the third edition to be published in 2007.
The information here covers the law applicable to England and Wales. It may not apply in Northern Ireland and/or Scotland. These news items are not a full or definitive statement of the law and are not intended as a substitute for professional legal advice. No responsibility for loss occasioned as a result of any person acting or refraining from acting can be taken by the author.
Chapter 20
INSURANCE
REVISED GUIDANCE ON CHARITY INSURANCE
Added 5/10/03. This information updates chapter 20 in The Voluntary Sector Legal Handbook 2nd edition.
CC49 Charities and Insurance was comprehensively revised by the Charity Commission in August 2003. It sets out which insurances are mandatory and provides advice on risk assessment to determine which other insurances should be taken out and which risks can be mitigated in other ways. It then explains the various types of insurance and includes an expanded section on trustee indemnity insurance and the Commission's authorisation procedures (see below). Guidance is also provided for specific situations such as insurance of volunteers and insurance for charities working overseas.
CC49 is at www.charitycommission.gov.uk/publications/cc49.asp.
Charities Act 2006: TRUSTEE INDEMNITY INSURANCE
Updated 19/2/07. This information updates ss.20.2.4 & 20.10 in The Voluntary Sector Legal Handbook 2nd edition.
From 27 February 2007, trustees can use charitable funds to purchase trustee indemnity insurance, if they believe it is in the best interests of the charity to do so—even if it is not authorised by the governing document. Charity Commission consent is required only if the governing document explicitly prohibits using the charity's funds for trustee indemnity insurance. The Act sets out what can and cannot be covered by such insurance.
These provisions are in s.39 of the Charities Act 2006, which inserts new s.73F to the Charities Act 1993. The 2006 Act is at www.opsi.gov.uk/acts/acts2006/20060050.htm.
Explanatory notes to the Act are at www.opsi.gov.uk/acts/en2006/2006en50.htm.
AUTHORISATION TO PURCHASE TRUSTEE INDEMNITY INSURANCE
Updated 20/2/07. This information updates s.20.2.4 in The Voluntary Sector Legal Handbook 2nd edition.
Most charities no longer need explicit authorisation to purchase trustee indemnity insurance (see above). Buit where a charity's governing document explicitly prohibits the purchase of trustee indemnity insurance, the Charity Commission has a simplified procedure for their authorisation of the use of charity funds to purchase it.
The Commission's approach is based on "self-certification" where trustees confirm that they have identified the risks of personal liability to which the trustees are potentially exposed; the identified risk(s) cannot be deal with by other means including other types of insurance or improved governance procedures; the trustees are aware of what trustee indemnity insurance normally will and will not cover; the cost of the insurance is reasonable in relation to the charity's income; and that if it is a membership charity, the members have agreed to the trustees applying for authorisation to purchase TII.
Detailed operational guidance and all the relevant forms are on the Charity Commission's website. The best starting point is the information sheet for trustees at www.charitycommission.gov.uk/supportingcharities/ogs/g100c004.asp.
A list of all the relevant publications and forms is at www.charitycommission.gov.uk/supportingcharities/ogs/index100.asp.
CHECKING THAT CONTRACTORS HAVE INSURANCE
Added 5/1/03. This information adds to ss.19.5.3.4 and 20.5.1.4 in The Voluntary Sector Legal Handbook 2nd edition.
In a recent case, a hospital hired in a "splat wall" for a fundraising event. (For those of you who like me are not into such things, a splat wall is where a person dressed in a velcro suit bounces on a trampoline and sticks to a specially coated wall.) A woman who was injured sued both the contractor and the hospital. It was clear that the contractor had a duty of care and had been negligent (in breach of its duty of care) in setting up the equipment. But the Court of Appeal was asked to rule whether the hospital also had a duty of care to the woman, and if so, whether it had been in breach of that duty.
The court ruled that as occupier of the premises the hospital did have a duty of care and as part of this duty, should have checked that the contractor had public liability insurance. The hospital had done this. However it had not asked to see the policy, and it turned out the policy had expired four days before the event. The appeal court held that it would not have been reasonable to expect the hospital to ask to see the policy, so by not having done so the hospital was not in breach of its duty of care.
Like all negligence cases the decision is specific to the facts in each case. But it emphasises the importance of taking reasonable steps to ensure you are hiring proper contractors, especially when they are operating on your premises. You should satisfy yourself that they are competent to do whatever you are hiring them to do, and check that they have appropriate insurances (generally public liability and/or professional indemnity).
To further protect the organisation, you may want to require a contractor to have insurance indemnifying your organisation if any claims are brought against you arising from the contractor's negligence.
The splat wall decision is Gwilliam v West Hertfordshire Hospitals NHS Trust and others (24 July 2002). A summary is at www.lawreports.co.uk/civjulb2.1.htm.
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