Why Insurance Matters Community Buildings Louise Currie
General Guidance • It is essential to remember that as trustees, members of a management committee have a duty under charitable law, to insure the charity’s assets and liabilities.
Make sure; • you have the correct policy for your needs • you understand the cover provided by the policy • you understand any restrictive covenants
Property insurance A What should be insured? – All property that is owned by the trust or for which it is responsible • hall, • outbuildings, • contents. Certain ‘high-risk’ items such as audio/video equipment, bar stock, etc should be declared separately. Also – equipment owned by users/hirers, which the committee may have agreed to insure.
B What type of cover? – try to cover on an ‘all risks’ basis – cover for any accidental loss or damage (subject to certain specific exclusions) – it should cost no more than the alternative fire and specified perils basis. Things generally excluded; • theft losses unless there is forcible and violent entry • damage caused directly by freezing conditions (water damage caused by subsequent bursting pipes IS, if the ‘all risks policy’ includes burst pipes cover) • subsidence cover is usually an ‘extra cost’ option
C Sums insured – should represent the full current rebuilding or replacement cost of the property – including current re-building cost, • Plus allowance for professional fees and cost of site clearance. • The recommendation by Charity Commission is to assess every 2 years – though this can be costly – so unless something has occurred that would increase sums insured (such as an extension) then a professional assessment every 5-10 years may suffice. Look at your policy! • Contents should be insured for the cost of replacement on a ‘new-for-old’ basis
D Consequential loss – if your building is damaged and out of use, and you are unable to ‘let’ it and suffer a loss of revenue, cover for loss of revenue following insured damage, is available and relatively inexpensive. • Additionally it may be possible to arrange cover for loss of revenue following accidental failure of public utilities, an outbreak of food poisoning or notifiable disease, murder or suicide (good grief!) or enforced closure on public health grounds
E Money – Insure money in transit ; • to banks or post offices • or at the home of any authorised official • insure money at the hall, fetes and exhibitions (money left in unattended vehicles is excluded) • if you have meters or vending machines which take coins, insure the cash inside them (some insurers may not be happy to insure cash in amusement or gaming machines) • good practice is to remove cash daily if possible. • check that it isn’t a condition of your cover that keys to safes, meters and vending machines are removed from the premises when the hall is closed • keep records of money, so that you can prove loss
F Personal accident – Personal accident cover provides for the payment of cash benefits in the event of accidental injury, irrespective of any legal liability. Cover can be arranged for; • all members of the committee, • honorary officers, • employees and volunteers during duties undertaken on behalf of the committee
G Inspection of playground equipment – committees responsible for children’s playgrounds are advised to comply with the recommendations in British Standard – BS EN 1176, which applies to the installation and maintenance of playground equipment • visual inspections should be made at least weekly • defective equipment taken out of use • remember that the rating for the equipment, is higher than that for the surfacing or fencing • inspection at least annually by someone with appropriate qualifications (independent of the committee) and inspection report acted upon. If you need assistance, contact the County Playing Fields Association or RoSPA
H Hall rebuilding costs – the sum insured (declared value) on the building (and outbuildings) must be sufficient to cover the cost of; • completely rebuilding the hall • professional fees • site clearance • local builders, surveyors or architects should be able to offer this advice.
Some policies are subject to ‘index-linking’ which increases the sum annually – so check your policy regularly – it is your responsibility. • VAT – Under current rules, construction of a new hall is zero-rated/exempt so it does not have to be included in your sum insured on the building • Apparently Charities can get 1hr free consultation with a R.I.C.S. surveyor – for more info - http://rics.org/charitypropertyhelp
I Security – external doors - should besubstantial in construction; recommended they have a five-lever mortice deadlock or five-lever close shackle padlock conforming to BS3621. windows and other glazed areas – the most frequent means of entry by thieves; recommended they are fitted with key-operated locks and windows to stock rooms (bar stock etc) have bars or grilles is advisable Cash in machines – empty regularly Keys – control access to keys/key holders. (take advice from your insurance company)
When the hall is in use – • Theft without forcible entry is likely to be excluded from your insurance cover – but securing doors from the inside is likely to be in breach of health and safety/fire safety regulations. • Ideally, the key should be left in the lock so it can be turned, or readily accessible next to the exit door However - take advice from the Fire Safety/Prevention Officer
End of session checklist - check; • gas/electrical/appliances are off • water taps off • lights off • close internal doors • secure all windows and doors • check cigarette bins are fully extinguished
2. Public Liability2. Public LiabilityManagement committees invite members of the public into the hall and therefore must insure its legal liability for injury or damage suffered by them for all activities connected with the hall – including fund-raising events held away from the hall It should cover; - committee members - employees - volunteers
After consideration, a claim may be made if the insured’s negligence can be proven. Check the policy wording for exclusions or restrictions – for example, use of a bouncy castle Recommendation – a minimum limit of indemnity of £5 million
In addition to the basic cover there are extensions available; • extending cover to indemnify users/hirers (other than commercial users) when it is not provided by any other insurance policy • car park liability • food poisoning liability
Planning an Event • Be clear who is organising the event – liability lies with the organiser • Where is it being held? If on a site away from the hall/grounds the land owner must have property owner’s liability and needs to agree to use of their land • Do a Risk Assessment (and record it) • Check attendance numbers (some policies limit numbers) • All commercial parties must have their own insurance in place • Bouncy Castles – a standard exclusion on most policies. If trustees of the hall are supervising children on the bouncy castle, you will need to extend your policy. This applies even if the owner of the equipment has Public Liability - as this only covers them in the event of an incident, if it occurred because of the bouncy castle itself. • Open Gardens – property owners liability will be needed, risk assessment undertaken, (identify potential hazards)
3. Employers Liability • Employers Liability must be insured by law, if the committee has any paid employees – whether full or part-time. Legal requirement is for £5,000,000. • The certificate should be displayed in the hall – but since 2008 it can be electronic, providing all relevant parties are aware of where it can be found. • Though since 2008 there is no requirement for you to keep the certificate, it is recommended you do so as an ongoing record - as a claim can arise many years after an alleged incident. • If a trading company has been set up (e.g. to run a bar) it must be mentioned on the certificate. • Some insurers’ Employment Liability covers employees, plus volunteer helpers, management/trustees. (check)
4. Trustee Liability and Trustee Indemnity a) Relief from personal liability for trustees • The Charities Act 2006 allows charity trustees to apply to the Charity Commission, and courts, for relief from personal liability for a breach of trust where a trustee has acted honestly and reasonably • this ONLY applies when mistakes have been honestly made • deliberate breaches of trust will be taken seriously by the Commission and the courts.
b) Trustee indemnity insurance • charitable funds can be used to purchase indemnity insurance – if it is believed to be in the best interests of the charity • covers trustees against personal liability when legal claims are made against them. (2006 act introduced this, without an explicit power from CC or their governing document) • CC consent is only required if the governing document explicitly prohibits using charity funds for this purpose.
It is designed to cover only those circumstances where a third party sues individual trustees for pecuniary loss resulting from; • breach of duty • breach of trust • neglect • error • omission • misstatement • libel • slander • or any other act committed by a trustee solely in the in the course of the activities of the charity.
Trustee indemnity does NOT protect against; • intentional wrong-doing • the making of improper profits and even when liabilities are negligence-based. • fraudulent acts • many kinds of damage will be excluded. Provided trustees act honestly and reasonably, there should be few concerns about personal liability and trustees may feel this insurance is not worthwhile.
Hiring Agreements • In your hiring agreement, include a section on Standard Conditions of Hire which addresses issues relating to insurance – for example; • Insurance and Indemnity – make it clear what the hirer is liable for; - cost of repair or damage? • claims, losses, storage of equipment? • Licences – you may want to point out that the hirer should check the appropriate licences are held by the hall - i.e. PRS/PPL? • Use of premises – you may want to say that the hirers must only use the building for the purpose outlined in the Hiring Agreement
Hiring Agreements (cont.) • Public Safety Compliance – you may want to point out that the hirer must comply with all conditions and regulations made in respect of the premises; • local authority, licensing authority, fire risk assessments, regulated entertainment • Means of escape • Outbreaks of fire • Health and Hygiene • Smoking • Electrical appliance safety
Public safety compliance (cont); • Accidents • Behaviour • Compliance with Children Act 1989 • Noise • Heating etc
Insurance and Indemnity • Confirm what the hirer will be liable for, whilst using the premises; • repair of damage • claims • losses (Distribute photocopy of the example Standard Conditions of Hire)