What Insurance Does a Charity Need Before Opening

Before a charity opens its doors it must make sure it is properly protected. Insurance is not only about legal compliance. It is about protecting the charity’s people, assets, reputation, and long-term survival. One unexpected incident can cause serious financial loss or even threaten a charity’s ability to operate. Trustees have a legal duty to protect the charity’s resources and insurance is an important part of that responsibility.

New charities often struggle to understand which policies are compulsory, which are recommended, and which depend on the type of activities the charity plans to run. In my opinion the safest approach is to start with the essential cover then add specialist policies based on risk. This avoids gaps that could expose the charity to claims while keeping costs manageable.

This guide explains the core insurances every UK charity should consider before opening, what each policy covers, the legal requirements, sector specific needs, and practical steps trustees should follow before choosing a provider.

Why Insurance Matters for a Charity

Charities face a unique mix of risks. They work with vulnerable people, rely on volunteers, run events, hire staff, manage properties, and hold funds entrusted by the public. Insurance protects the charity from unexpected events such as:

• Injuries to volunteers, staff, or beneficiaries

• Damage to property or equipment

• Claims relating to advice, care, or safeguarding

• Financial loss caused by fraud or theft

• Errors made by trustees

• Loss of income following disruption

It also reassures funders, partners, landlords, and beneficiaries that the charity is professionally managed. Many grant providers ask whether insurance is in place before releasing funds.

The Charity Commission expects trustees to assess risks carefully and insurance is one of the easiest ways to manage that duty.

The Essential Insurance Policies a Charity Should Consider Before Opening

Every charity is different but there are several policies that nearly all charities should review before beginning operations.

The most important are:

1. Employers liability insurance

2. Public liability insurance

3. Trustee indemnity insurance

4. Professional indemnity insurance

5. Property and contents insurance

6. Event insurance

7. Cyber insurance

8. Business interruption or loss of revenue insurance

The right combination depends on whether the charity has staff, volunteers, property, public contact, or digital operations.

1. Employers Liability Insurance

Is it required

Yes. It is a legal requirement if the charity employs staff. This applies even if the charity only has one employee working part time.

What it covers

• Injury to employees

• Illness caused by work

• Compensation payments

• Legal costs

Even well managed charities face risks. If a staff member suffers an accident, a fall, or stress related illness they could make a claim. Without insurance these costs fall directly on the charity.

Does it cover volunteers

Volunteers are not employees under law but many insurers include volunteers under employers liability or offer a combined staff and volunteer policy. Trustees should double check because volunteers must be protected.

Why it matters in year one

Any charity with staff must have this insurance in place before the first day of employment. The Health and Safety Executive can issue fines if the charity fails to obtain it.

In my view no new charity should delay this policy once recruitment begins.

2. Public Liability Insurance

This is the most widely used charity insurance because almost all charities interact with people or run activities that involve the public.

What it covers

• Injury to members of the public

• Damage to property owned by others

• Accidents during events, workshops, or activities

• Legal fees and compensation

When it is needed

• Running any public facing activities

• Using hired venues

• Visiting beneficiaries in their homes

• Running community projects

• Hosting volunteers or attendees

• Operating a charity shop

Real examples

• A visitor slipping on a wet floor at a community centre

• A child being injured at a charity run sports session

• A pram being damaged at an event

• A member of the public tripping over charity equipment

Without insurance a single claim could bankrupt a small charity. I believe public liability should be one of the first policies arranged by any charity planning public engagement.

3. Trustee Indemnity Insurance

Trustees carry legal responsibilities. If something goes wrong they could be held personally liable for mistakes, financial errors, or governance failures. This risk increases when trustees sign contracts, manage assets, or oversee staff.

What it covers

• Legal costs for defending trustees

• Claims relating to breach of duty

• Errors in decision making

• Mismanagement allegations

• Negligence claims

Is it required

Not required by law but strongly recommended.

Why it matters

Trustees are volunteers. They should not risk personal finances when acting in good faith. Trustee indemnity insurance gives protection and encourages skilled people to join the board.

In my opinion this policy is vital for any charity with significant responsibilities such as safeguarding, property management, fundraising, or financial administration.

4. Professional Indemnity Insurance

Professional indemnity insurance protects the charity if it provides advice, guidance, support, or specialist services. It is essential for charities that work in areas where incorrect advice could cause harm.

What it covers

• Claims caused by incorrect advice

• Mistakes in written materials

• Negligence in training or consultancy

• Errors in support services

• Legal defence costs

Suitable for charities that provide

• Counselling or mental health support

• Training courses

• Educational programmes

• Advice services

• Mentoring programmes

• Welfare or benefits guidance

Real example

If a charity provides incorrect financial guidance that leads to someone losing money, professional indemnity insurance covers legal costs.

Not all charities need this policy but those providing advice or specialist support should consider it essential.

5. Property and Contents Insurance

Many charities use offices, community centres, storage units, or charity shops. Property insurance protects buildings and contents against damage or loss.

What it covers

• Fire

• Flood

• Theft

• Vandalism

• Equipment damage

• Stock loss

When it is needed

• If the charity owns a building

• If the charity leases a building

• If valuable equipment is held on site

• If the charity operates a shop

Landlords often require tenants to hold contents and fixtures insurance. Even small charities running from one room often rely on computers, equipment, and stock that would be expensive to replace.

6. Event Insurance

Events are a major source of fundraising. They also carry risk.

What it covers

• Injury to attendees

• Damage to venues

• Cancellation

• Weather disruption

• Equipment damage

Suitable for

• Fun days

• Sponsored walks

• Festivals

• Fairs

• Concerts

• Community gatherings

Event insurance is often required by local authorities when applying for licences or permits.

In my opinion it is one of the most important policies for charities that run large public events because incidents are unpredictable.

7. Cyber Insurance

Charities collect sensitive information including:

• Donor details

• Volunteer information

• Beneficiary data

• Emails and contact information

A data breach could cause serious harm and result in penalties from the Information Commissioner’s Office.

What it covers

• Cyber attacks

• Data breaches

• Ransomware

• Recovery costs

• Legal advice

• Notification to affected individuals

Why it matters

Charities are targeted frequently because they often use older systems and hold valuable data. Cyber insurance is increasingly seen as essential.

8. Business Interruption or Loss of Revenue Insurance

If the charity cannot operate due to an event such as a flood or fire, it may lose income or be unable to deliver services.

What it covers

• Lost income

• Temporary relocation costs

• Additional expenses needed to continue operating

This policy is more common for charities that rely on trading income, charity shops, or paid services.

Insurance for Volunteers

Volunteers are central to many charities. Because they are not employees the law does not require specific insurance for them. However they must still be protected.

Charities should consider:

• Employers liability that includes volunteers

• Public liability that covers volunteer activity

• Personal accident insurance

• Travel insurance for volunteers using vehicles

Volunteers often face the same risks as staff. In my view charities should always ensure volunteers have equal protection.

Insurance for Charities Working With Children or Vulnerable Adults

Charities delivering safeguarding related services need additional insurance coverage.

Safeguarding liability cover protects against:

• Claims involving neglect

• Allegations of inadequate safeguarding procedures

• Failures in supervision

• Harm caused while in a charity’s care

This type of cover is crucial for:

• Youth charities

• Care charities

• Educational organisations

• Mentoring services

• Outreach programmes

Safeguarding risk is taken very seriously by insurers and regulators so charities must demonstrate strong policies.

Sector Specific Insurance Needs

Different types of charities face different risks. Some may require specialist policies.

Community centres

• Building insurance

• Hirer liability insurance

• Equipment cover

• Public liability for large groups

Environmental charities

• Land management insurance

• Volunteer outdoor activity cover

• Tools and equipment cover

Arts and cultural charities

• Venue insurance

• Art and exhibition cover

• Event cancellation

International aid charities

• Travel insurance

• Kidnap and ransom cover

• Overseas liability

• Political risk cover

Animal charities

• Animal liability cover

• Veterinary equipment insurance

• Public liability for rehoming activities

Food charities

• Food hygiene insurance

• Transportation insurance

• Freezer and refrigeration equipment cover

In my experience specialist insurers can tailor policies to match unusual risks.

How to Choose the Right Insurance for Your Charity

Step 1: Assess your activities

List all the ways your charity interacts with the public, staff, volunteers, and beneficiaries.

Step 2: Identify your risks

Think about accidents, property damage, safeguarding, data, fundraising, and advice.

Step 3: Review legal requirements

Employers liability is mandatory if you employ staff.

Step 4: Choose a specialist charity insurer

Some insurers create policies specifically for charities which ensures coverage fits the risks.

Step 5: Compare what is included

Cheaper policies often exclude volunteers, events, or safeguarding.

Step 6: Document trustee decisions

This protects trustees if a claim arises.

Step 7: Review insurance annually

As your charity grows risks change and cover may need updating.

Common Mistakes When Arranging Charity Insurance

• Assuming volunteers are automatically covered

• Choosing the cheapest policy without checking exclusions

• Forgetting to insure equipment kept off site

• Not notifying insurers about risky activities

• Failing to update insurers when operations expand

• Not having written risk assessments

• Thinking public liability alone is enough

• Not reading policy documents carefully

Avoiding these mistakes protects the charity and trustees.

Real UK Examples

Example 1: A Youth Mentoring Charity

They run mentoring sessions in schools. They need public liability, safeguarding liability, and professional indemnity. Volunteer cover is included in employers liability.

Example 2: A Community Café

Volunteers serve food to the public. They need public liability, contents insurance, and food hygiene cover.

Example 3: A Charity Shop

They need public liability, employers liability, stock insurance, and business interruption insurance.

Example 4: A Mental Health Support Charity

They provide counselling services. They need public liability, professional indemnity, and trustee indemnity.

Example 5: A Festival Fundraising Event

They need event insurance, public liability, and equipment cover.

Final Thoughts

Insurance is one of the most important preparations a charity must make before opening. It protects the organisation from financial risk, supports good governance, and gives trustees confidence that they can operate safely. The right insurance depends on the charity’s activities, staffing, and public engagement but most charities need at least public liability, employers liability if they have staff, and trustee indemnity.

In my opinion no charity should begin operations without fully understanding its risks and arranging suitable insurance. A single incident can undo years of hard work but the right insurance ensures the charity remains resilient, trustworthy, and ready to deliver its mission.