How To Cover A Building Accident With Insurance

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1 Gold Standard Insurance for NCS Trust Programme Deliverers What are the insurable risks to consider? Working with large, diverse and growing numbers of young people, some of them could be quite vulnerable. There is potentially a huge reputational risk to not dealing with incidents efficiently and effectively. Working with an age group in residential situations where sleeping arrangements will need to be carefully considered. Large numbers of volunteers, contractors and staff working with young people, means that control over recruitment selection and safeguarding is very important. Higher risk challenging physical activities which with the frequency you are running them is statistically going to lead to some injuries. Potentially lots of different agencies involved in delivering the experience means there is a need for clear process mapping, to avoid gaps in vetting. Some deliverers will be large and corporately run, some will be small and not even have a legal status separate to their board members. Some thought about protecting trustees and director from personal liability is important. Helping at a pivotal time in young people development could lead to claims that you have actually caused detriment. Therefore records need to be through and accurate. You may be transporting young people around the country, and you will require statutory insurance for use of motor vehicles. You may own activity equipment, zip wires, hoists, harnesses etc. which will require regular inspection. If you own sites you will need to consider disaster recovery and business continuity planning. You will need to properly protect you assets and equipment from loss, damage, theft and malicious damage. 1 Issue

2 Must have insurance: Public Liability Public Liability covers your liability for injury to members of the public and people using your services Abuse cover: Programme deliverers will be working with young people so it is vital that their Public Liability insurance includes cover for allegations of abuse. Some policies are silent on the issue and say this means they cover it, others are explicit in the fact they cover it, it is best to go for one which explicitly covers abuse, to save on wrangling over a claim being covered or not. Abuse may be covered on a claims made or a claims occurring basis, the difference is as follows: Claims made- All claims made against you in the period of insurance will be covered even if the event the claim is being made for occurred in the past. You must check the retroactive date as this stipulates how far back incidents can have occurred, so this needs to go back to when you started out, or back to when you were insured on a claims occurring basis. The benefit of this type of cover is that often abuse claims will be made many years after the event, if you have cover on an occurring basis you will need to go back over paperwork to find who insured you at the time of the incident. If the incident happened many years ago, you may have lower limits in line with awards made at that time. Claims made means you use your current policy for old claims so don t need to go back over records and limits of indemnity will be in line with modern legal costs and awards. Claims Occurring Means the policy covers claims where the incident occurs during the time of cover, so the claim may be made many years in the future but so long as the incident happened in the year of insurance the policy will pay out. Benefit of this type of cover means that if you stop working with children or vulnerable adults in the future and no longer want to buy abuse cover you won t need to consider run off cover for old claims. The rest of your Public Liability cover is likely to be on a claims occurring basis, this is the industry standard for the UK. Indemnity to principals: You are likely to have ad hoc volunteers, instructors, or contractors occasionally acting on your instruction and under your control. It is important that if they harm any members of the public in performance of their duty to you that your insurance policy will respond to consequences of their actions. Member to member: You will be working with large numbers of young people from a variety of back grounds and at times there may be discord, if one young person injures another while in your care you need your insurance policy to respond in this scenario. Limit of Indemnity: Insurers offer a range of limit of indemnity (the maximum they will pay out) from 1,000,000 right through to 50,000,000+. Research was done in the last decade to look at the likely maximum pay out on a claim; the most expensive type of claim is the permanent total disablement of a promising young person. In this scenario insurance will pay out for legal costs plus 2

3 awards for the injury, lifetime of care, loss of future earnings etc., this potential cost was calculated to be near to 5,000,000 so many local authorities will ask for this as a minimum for organisations requesting funding. Some local authorities have started asking for 10,000,000 as a minimum to take into account rising costs of claim settlement, so ideally as you are working with young people and doing some quite physical activities somewhere between the 5,000,00-10,000,000 mark would be the correct place to pitch this, if you are a larger organisation working with a larger number of young people you may want to consider higher, some large national youth charities have 20,000,000-50,000,000 limit of cover. Employers Liability Staff: If you employ anyone in any capacity even temporary, part time or seasonal including students or others on work placements it is a legal requirement to have Employers Liability Insurance. This covers your legal liability for any injury, disease or fatality to employees which may occur through work or as result of workplace conditions. Employees injured due to your negligence can seek compensation even if your organisation goes into liquidation or receivership. Failing to have this insurance can lead to fines of 2,500 per day for not having it and 1,000 per day if you don t display your certificate. You employ someone if any of these apply: You have a form of contract of service with them to perform work for you. You pay tax and national insurance on their behalf from the money you pay them. You control where they work and how they work. You must have at least 5,000,000 of Employers Liability cover if any of the above applies, but in practice most insurers do not offer less than 10,000,000 of cover. Volunteers: Volunteers do not have employment status and so you are not legally required to have Employers Liability insurance for them, however it is good practice to offer the same duty of care to volunteers as employees and it is advisable for you take out Employers Liability cover for your volunteers even if you only have volunteers and no employees as the damages and legal costs of defending a claim can be hefty. Most insurance companies include volunteers under Employers Liability cover, however you must tell your insurer you have volunteers or they may assume you do not and not cover them in the event of a claim. 3

4 Motor If your organisation owns vehicles that are used on a public road or place, you must by law insure them; as a minimum this should be third party cover but you may wish to take out fully comprehensive cover for all round protection. Insurance companies classify motor vehicles into groups from 1-50 with 1 being the lowest risk and cost, this is based on the power of the vehicle, replacement cost and likelihood of theft and accident. If you have a few vehicles usually between 3-5 or more you can take out fleet cover which means that the vehicles are rated as a fleet with one rate applying to all vehicles, rather than on an individual vehicle basis and is more cost effective. You have the option to have one named driver or can specify a number of drivers, or take a policy on an any driver basis, which means anyone who you give permission to drive your vehicle will be insured to drive the vehicle. This can be particularly useful if you depend on volunteers and want the freedom to allow anyone to drive your vehicle at short notice. Many insurers will be able to include breakdown cover as part of your policy with discounted rates; it is worth checking the cost of buying through your insurer as well as taking separate breakdown cover. Engineering inspection If you have technical equipment such as zip wires, lifts or boilers etc., many, by law, need regular inspection by a competent person. You can take out Engineering Inspection Insurance which provides an inspection service, you may have this done by a non-insurance company, e.g. British Gas will inspect boilers, but be aware insurers can do this too and may offer a more competitive price. You can also insure the equipment for damage SUD (sudden Unforeseen Damage). If a lift cables snaps or a boiler blows up it may also cause damage to the surrounding area as well as the boiler/lift and shaft. 4

5 Should have insurance: Trustee Indemnity Trustees are ultimately responsible for a charity s management and decisions. Therefore any financial losses incurred arising from any wrongful act e.g. where the trustees have failed to discharge their duties, may result in them being personally liable to make good the charity s losses. The Trustees Indemnity cover can provide protection to trustees where they may be held personally liable. The allegation could come from either the charity itself for losses incurred by the charity due to a trustee s actions e.g. inappropriate use of charity funds or entering into contracts not in the interest of the organisation. Or it may be an allegation from a third party where that party has suffered a financial loss due to any actual or alleged actions by the charity and/or its trustees. If the charity is not incorporated i.e. it is not a company that is limited by guarantee, or a charitable Incorporated Organisation (CIO) it has no legal personality and therefore it is the trustees who will be held personally liable if the charity has insufficient funds to meet its financial obligations. Trustees often volunteer to help well deserved causes without realising that they could potentially lose their home if the charity is unable to meet its debts, Trustees Indemnity Insurance will help provide peace of mind to them. If a charity is incorporated and they are a company limited by guarantee or a CIO, this provides greater peace of mind for trustees as it is the company who will be liable for any debts arising. However as a limited charity company, it may still be worth considering Trustees Indemnity Insurance as the limited guarantee element only applies if the loss incurred causes the organisation to go into administration. It is worth noting that if the trustees or directors acted improperly or fraudulently, whatever their charity status, they can be held personally liable and in this situation a Trustee Indemnity Insurance policy would not respond. Trustees Indemnity Insurance policies are intended to provide protection for trustees as individuals where they find themselves personally liable. However often third parties bring the claim against the organisation and the trustee may find that he/she is unable to use the policy because the policy wording expressly excludes claims made in the name of the organisation. It is therefore important to make sure both individual trustees and entity defence are covered in the policy you take out. Professional Indemnity Your services providers may provide advice and signposting on cv building, also instructing and mentoring on activities and challenges. Many voluntary organisations think that Professional Indemnity cover is only needed if involved with providing professional services such as legal, technical, financial etc. However, a charity giving advice or providing training, particularly they charge a fee for the services, should consider Professional Indemnity cover, as this would protect them if someone alleges that you have advised them incorrectly causing them a financial loss. 5

6 Material Damage Building: if a building is owned it is likely to be the most valuable asset, so really should be insured, if there is a mortgage on the property it may be a condition of the mortgage. The valuation must be accurate to protect against averaging or higher than necessary premiums. Malicious damage: Sites which are remote or in non-residential parts of a city are more likely to suffer from vandalism and malicious damage, some insurance policy s exclude this type of cover, but this may affect your ability to use the building or if working with vulnerable young people away from home for the first time, and you aren t able to remedy the damage quickly it could make them feel less safe a secure Unoccupied: If the site is only used for parts of the year and is left unoccupied for other periods of time (unoccupied usually being for more than 30 consecutive days) there may be restrictions on cover. It is important to make sure you will still be protected by insurance if your site is left unoccupied. Contents and All risks: if things are kept inside a building e.g. furniture, computers, stock etc. they can be insured as contents, if they are kept outside or are often used away from the premises e.g. laptops, they should be insured as All Risks, this can be either UK, EU or worldwide depending on need. If there is only a small amount of low value equipment it may be decided not to insure, excesses and equipment value should be taken into account. High value items may need to be specifically itemised. Asset registers should be regularly reviewed and compared with declared values on insurance policies to make sure sums insured are accurate. Business Interruption If providers own their own property then they may need to consider business interruption cover, particularly with regard to some of the activity centres. Business interruption cover protects an organisation in a situation where they cannot use their premises for their work because the premises has been badly affected due to an incident such as flooding, fire and other incidents rendering the premises unsuitable or unsafe for use. Whilst their building insurance will pay to restore the building this can take time, the site will have to be cleared, and often in the case of a total rebuild planning permission will have to be sought. During this down time they may be unable to deliver services and so lose income, lose systems and records, or they may try to move their operations elsewhere which will mean they incur additional costs in relocating also if they rent out any part of their premises they may lose out on rental income. Business Interruption cover will pay an amount to cover the shortfall in income/revenue and pays any increased costs of running the organisation as a result of the event and it is usually taken out in conjunction with buildings insurance. Loss of income/ revenue: If the building is very specialist e.g. an activity centre, you may not be able to hire an alternative, in which case your only option may be to cease functioning until the building work is completed. In this case you are likely to lose income. This covers your usual income less costs 6

7 you are not incurring due to inactivity. It is worth noting most policies will not cover income from grants and donations, so if this is the main income source this cover may not be suitable. Additional Expenses: If it is possible to use alternative premises while your building is being rebuilt, there are likely to be costs incurred, e.g. printing and marketing costs to inform your customers of a change of address, additional rent etc. You should consider the market rate for hiring a suitable alternative building and any other costs you will incur. Both options will require you to specify a limit of indemnity and a period of time, if a building is large or a site is complex you need to consider this may take more than a year to get back to normal running order, so you may need 18, 24 or 36 months cover. The limit of indemnity is the total amount payable so if you would lose 100,000 or income each year and think it would take 2 years to get up and running the limit of indemnity would need to be 200,000. 7

8 Legal Expenses/ Employment Protection Liability Could have insurance: Legal Expenses insurance covers the cost of defending your organisation against legal action in disputes with third parties such as suppliers, vendors and other organisations. The insurer will pay solicitors, barristers, accountants and expert witness fees and expenses as well as court costs and opponents costs if you are ordered to pay them in a civil court. Legal Expenses insurance often provides advice and a legal helpline. Legal Expenses: Legal expenses cover applies to a wider set of scenarios e.g. disputes with suppliers as well as employment practices. If the insurer believes you have a less than 50% chance of winning your case they will not take the case on and the policy will not respond; you will have to meet the legal costs yourself. Employment Protection Liability (EPL): Employment Protection Liability also sometimes referred to as Employment Practices Liability covers specifically employment dispute situations and not wider types of disputes. It will also pay out for damages awarded if found against you well as the legal costs. It allows you to claim on the policy no matter the pre-determined chance of winning your case, providing policy terms and conditions are met. Employment Protection Liability also generally allow for higher limits of indemnity than legal expenses pound for pound spend of premium. This cover is therefore particularly useful if your main concern is the risk of employment disputes and/or if you have staff in the higher pay levels where the damages and awards you would have to pay out would be substantial. Having EPL cover can give you a peace of mind in the event of an employment tribunal finding against you Personal Accident Personal Accident insurance pays a regular benefit in cash to a person who cannot work because they have had an accident. Persons covered can include staff, volunteers members, trustees and anyone else working with your organisation if they become injured while undertaking activities for you. The cover would pay out a defined amount to the injured person on a regular basis, normally every week, up to a maximum number of weeks, usually 52 or 104. It can also pay a lump sum for death or a specific injury, such as loss of an arm, leg or eye This is a nice to have cover as it provides protection for your people, but is not limiting a risk to the charity, the charity would not have to make a payment, or lose out financially in the absence of insurance as this would be for no fault injuries, liability for injuries would be picked up elsewhere (Public Liability or Employers Liability depending on the circumstances) Basis of cover: Either 24 hours basis or whilst on charity business and commuting only or mix and match depending on the role of the person covered. What to cover: This is called a capital and weekly amount, capital refers to a one off payment for permanent injuries e.g. loss of a limb, weekly payments cover temporary injuries e.g. a broken bone 8

9 and usually has an excess period of a number of weeks, so once an injury has affected someone for X number of weeks the weekly amount will be paid from that point up to the number of weeks stated in the policy. Who to cover: You can have different levels of cover for different types of employees, e.g. senior manager, staff and volunteers with different amounts of cover for each group. What type of pay out: Capital benefits can be either a fixed amount e.g. 5,000 or a percentage of salary e.g. 3 x Salary. Weekly benefits are normally on a fixed amount basis e.g Fidelity Also sometimes known as Fidelity Guarantee, this policy will cover your organisation for loss of money or property as result of employee or volunteer dishonesty. Examples are where a member of staff or a volunteer steals money, commits fraud including computer fraud, embezzles money etc; Fidelity insurance will provide cover for your organisation to recoup such losses. Often basic money and contents insurance will only provide cover if there is a forced entry into the property e.g. someone breaks in and steals property or money. But if an employee or volunteer, who has keys or access to your premises, steals, this will not come under the scope of the normal contents and money insurance. Money Provides cover for cash, so only suitable if an organisation holds large amounts of cash in their premises or while fundraising. Excesses are usually circa 75 so that should be taken into account when considering if this cover is appropriate. 9