Insurance for Museums

Transcription

1 Insurance for Museums by for Museums in Somerset AGM Insurance is all about managing risks within an organisation and financially protecting against unwelcome outcomes. Managing Risk One way of managing risk is to have appropriate insurance cover. Having the right type and level of insurance cover to provide protection against financial and reputational risk is vital for charities but needs to be tailored to each charity s needs. The following slides outline some of the key areas of legal liability cover that will be of relevance to many trustee boards. Types of Insurance Cover Employers Liability Statutory Obligation This is a basic requirement of law and provides an indemnity limit of 10m against legal liability to pay compensation for bodily injury, death, disease or nervous shock sustained by employees or volunteers of the company arising in the course of employment. Charities with paid employees and volunteer workers should be aware that: Under Health & Safety (H&S) regulations, the law makes no distinction between paid or authorised voluntary workers. Volunteers working for a charity have responsibilities to comply with good working practices and should work within any parameters set out by the charity to meet H&S requirements. It is the charity s responsibility to take reasonable steps to ensure that volunteers understand these requirements. As an employer, a charity has a legal duty of care to ensure the safety of anyone working for them and for anyone affected by those workers activities. Public Liability Provides indemnity for legal liability for: Accidental death and/or bodily injury to third parties; and/or,

2 Accidental loss or damage to third party property arising out of the company s business. The third party has up to 3 years to make a claim for bodily injury. The claim may not be presented to you or insurers until the last minute. Event Insurance In certain circumstances, a charity could be found legally liable for an injury to or death of a participant or spectator, depending on the type of event and degree of involvement that the charity has. In-house events: as the organising body, liability rests with the charity for any accidental bodily injury to a member of the public either participating or spectating. Sub-contracted events: when using a third party, it is the responsibility of the charity to check that they have the necessary competence and have public and employers liability cover. Third-party events: for a liability claim to succeed, negligence has to be proved and to prove negligence, there needs to be a failure in the duty of care. If a charity is unaware that an activity is taking place in its name, it is unlikely that duty of care could apply. If a charity is asked to endorse a venture by volunteer fundraisers, the Institute of Fundraising recommends that the charity should consider providing a checklist of issues to consider. In its guidance literature it provides an example advisory letter to fundraisers which includes the need for insurance. Find this at Trustee Indemnity Insurance (TII) Although not a legal requirement, this particular insurance cover is often considered essential by charities when seeking to recruit high calibre Trustees. Trustee indemnity insurance (TII) protects trustees against having to personally pay when legal claims are made against them for a breach of trust, a breach of duty or negligence, committed by them in their capacity as trustees. The main difference between TII and other types of insurance taken out for the benefit of the charity is that TII directly protects an individual trustee, rather than the charity itself. For that reason, TII is regarded as a form of personal benefit. Although trustees are not entitled to any remuneration or other personal benefit from their role, legislation In England, Wales and Scotland does allow charities to use their funds to purchase TII.

3 Examples of Claims Claim for alleged Racial Discrimination Two separate claims were made by former employees of the charity, alleging racial discrimination. The first employee s claim against the trustees stated that she received discriminatory treatment due to her ethnic background. She alleged that the other white employees received preferential treatment, and that whilst off sick due to stress related illness incurred whilst working for the trust, she was unfairly dismissed. The second employee also alleged that whilst off sick he was unfairly dismissed on the grounds of race. The trustee named stated that no such discriminatory action occurred and that the two employees were dismissed due to their sub-standard performance and unacceptable behaviour in the workplace, and that both employees were still within their probationary period. The trustee also produced evidence that both she and the trust had received national recognition for the work they have done to combat racial discrimination. Total costs of just under 20,000 were incurred in defending the case. Claim for Loss of Documents The charity suffered a severe loss when over 6,500 of computer software was stolen. Not only were considerable amounts of software lost but also the data that was contained on them was also taken. The policy paid for the replacement of the data and software ( 10,000 in total). 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 without consultation to the landlord. This broke the conditions of the charity s lease on the property, and subsequently the landlord 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 Dishonesty of a Trustee A claim was made by a charity, which had suffered a loss of over 12,500. Due to poor internal controls, one of its trustees managed to fraudulently withdraw 11,000 in a single transaction, then a further 1500 at a later date. The claim was settled for a total amount of over 10,500 including fees, after deduction of the insured s 20% contribution. Claim for legal fees to defend a Charity Commission Investigation

4 An investigation by the Charity Commission led to allegations of the charity using their charitable status for avoidance of tax on their trading subsidiary. The charity was required to re-structure their operation at their own cost, but the legal fees and other costs in their investigations and defending these allegations were covered, coming to a total of over 1,200. Claim for breach of Trust A claim was made against one of the Trustees of a 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 breach of Trust Upon the liquidation of the Charity it was alleged that the Trustees mishandled the winding up and distribution of remaining assets. Though the Charity was Limited by Guarantee, and the liabilities of the Trustees and Directors were negligible, claims were been made by creditors alleging that the Trustees incompetence resulted in the Charities inability to pay all of its creditors. The claim reached a total cost of 6,000. Claim for alleged breach of Trust and defamation A president of the board of Trustees was forcibly removed from his position as a Trustee. A claim was initiated against other members of the Board of Trustees by the former president, alleging that he was removed outside of the rules and deeds of the Charity and that in forcibly removing him the other Trustees committed defamation. Conclusion However extensive the insurance cover purchased, it is not an alternative to good risk management. Having a structured approach to risk management enables charities to protect their people and property from harm and will also help defend a charity in the event of a claim. With proper risk management processes and the right type and level of insurance cover in place there is no reason why charities shouldn t be able to carry out their activities safely and knowing that, if something does go wrong, help from insurers will be available

5 About Atom Insurance Ltd. Formed in 2002 following a MBO, we are a dedicated commercial insurance broker offering a very individual and detailed approach. Acquired the business of W A Trump, the oldest insurance brokerage in Taunton Members of a buying group controlling in excess of 4bn premium We have a dedicated team with many years experience in all elements of the industry Broker for Ecclesiastical Insurance plc Contact Details Blackdown House Blackbrook Park Avenue Taunton Somerset TA1 2PX Tel: Fax: insurance@atominsurance.co.uk Shaun.Briddon@atominsurance.co.uk Ecclesiastical Insurance plc Ecclesiastical Insurance have been insuring faith buildings and museums since 1887 They have expertise in the area of listed buildings and fine art valuers Partners include Museum of Science & Industry (Manchester), Blenheim Palace, Old Royal Naval College, Chatsworth House, Beatles Museum, The Royal Artillery Museum, Warwick Castle and St Paul s Cathedral. Contact Details Beaufort House Brunswick Road Gloucester GL1 1JZ Tel: information@ecclesiastical.com