Understanding Insurance for Third Sector Organisations
- Dan Coast
- 14 hours ago
- 2 min read
Ever tried reading an insurance document and felt like you deserved a medal just for getting to the end? You’re not alone.
While insurance might not be the star of any blockbuster movie, it is one of the unsung heroes keeping our community groups safe, supported and able to get on with the good stuff. So, grab a cuppa, settle in, and let’s take a look at what insurance actually means for organisations like yours — without any of the baffling jargon or tiny-print induced headaches.
Why Insurance Matters
Insurance plays a vital role in protecting charities, community groups and voluntary organisations. Trustees and management committees have a duty to safeguard their organisation, and ensuring the right insurance is in place is a key part of that responsibility. The type and level of insurance an organisation needs can depend on several factors, including:
Legal requirements – some insurance is compulsory under UK law.
Governing documents – your constitution or rules may require specific cover.
Activities and assets – for example, whether you own premises, employ staff, or use volunteers.
Ultimately, insurance helps protect the organisation against unexpected costs and risks that could otherwise seriously impact its work.
Compulsory Insurance
Some policies are legally required:
Employer’s Liability Insurance Essential if your organisation employs staff. It must provide at least £5 million cover for injury or illness caused during employment.
Motor Insurance Required if your organisation owns or uses a vehicle. This must cover liability to third parties, and in some cases, cover for damage to the vehicle itself.
Discretionary but Important Insurance
While not legally required, many organisations choose additional cover for protection and peace of mind:
Public Liability Insurance Highly recommended for organisations that run activities, events, or manage buildings. It covers injury, loss or damage to members of the public, including volunteers.
Property Insurance Covers buildings, contents, equipment and cash against damage or loss.
Professional Indemnity Insurance Protects against claims arising from incorrect advice or professional services provided.
Fidelity Insurance Provides protection against theft or fraud by staff or volunteers.
Trustee and Directors’ Indemnity Insurance Offers limited protection for trustees acting in good faith. It does not cover reckless or dishonest behaviour.
Cyber Insurance Covers losses from cyber incidents, data breaches, business interruption and associated recovery costs.
Using Exclusion Clauses
In some cases, risks can be managed through exclusion clauses or disclaimers in tickets, signs or contracts. However, the law limits their effectiveness, especially where negligence, personal injury or consumer rights are involved. Legal advice is recommended before relying on them.
Who Should Be Covered?
Insurance should protect everyone involved in delivering your organisation’s activities—including:
Staff
Committee or board members
Volunteers
Members taking part in activities
Good Practice for Managing Insurance
To ensure your organisation stays protected:
Review your policies regularly.
Keep an up-to-date inventory of equipment and property.
Make sure the cover level matches the value of assets.
Assign a committee member to oversee insurance matters.
Ensure accurate information is provided to insurers, as non-disclosure can void a claim.
Further Information
More detailed guidance for charities is available from the Charity Commission’s publication Charities and Insurance (CC49). Third Sector Support Wales also provides support and advice for voluntary organisations across Wales as of course can your Local GAVO Development Officer.
Contact your local Development officer - communitydevelopment@gavo.org.uk
