An Introduction to Social Enterprise Insurance (guest post)
The insurance requirements for social enterprises are the same as any other business. However, as an organisation that operates for social good, you may benefit from some specialist insurances that cater for your business model. Our latest guest post comes from Elaine Denny, CaSE Insurance‘s very own social enterprise expert…
Let’s start with the basics and cover the sections of cover that are legally required. All organisations that have employees are required to have Employers’ Liability insurance (this is the definition of employees). This insurance protects your organisation from claims made by your employees that arise due to your negligence. Secondly, if you own and operate motor vehicles on public roads, you are also required to insure those vehicles.
If you use volunteers in your social enterprise you should make sure that your organisation and the volunteers are properly covered. The Charity Commission advise you to treat your volunteers in the same way as your employees and, in addition to providing adequate training, supervision and support, to ensure volunteers are covered by your insurance. Volunteers should be specifically referred to under either your Employers’ or Public Liability insurance and your insurer should be made aware of your volunteers. Having volunteers insured as employees under your Employers’ Liability can provide better cover in the case of injury, as there is a lower threshold for negligence against Employers’ Liability compared to Public Liability.
We’ve already mentioned it, but the next insurance that you will likely want to consider is Public and Products Liability. This insurance is recommended from the moment that your social enterprise becomes active. Public Liability provides cover for claims made against you by third parties for accidental damage or injury; Products Liability covers you if a product you sell or supply causes injury or damage.
You might want to insure your property, contents, assets and money, as a loss of one of more of these items could have a negative financial impact on your social enterprise. When calculating the sums insured for your contents and assets, ensure that you’re considering the full replacement value (and not the value written in your accounts, which will generally includes deprecation). Your property and content sections may require you to comply with some conditions – for instance regarding security and occupation – so ensure that you are aware of these and follow them diligently.
In addition to these types of cover, there are several other insurances that can help protect your organisation. Here are just a few you may wish to take a look at:
- Directors and Officers insurance (known as Trustee Indemnity in the charity world) covers a claim against either the legal entity (your social enterprise), the individual directors and managers, or both, due to errors and omissions. Very few claims lead to successful action against directors but this inexpensive cover provides the benefit of having an insurer to support you in handling or defending the claim.
- Professional Indemnity protects you against claims that your wrongful acts (typically negligent acts or breaches of duty) have led to someone suffering loss where they were relying on you to exercise reasonable skill and care in providing professional, advisory, design, counselling, sign-posting and other services requiring skill and care.
- Business Interruption provides cover for losses incurred due to the interruption of your social enterprise’s operations or the increased cost of working following loss, damage or loss of use of a property.
These individual types of cover are all available to you in one policy, such as the CaSE Insurance combined policy. By combining these insurances into one policy, you are only dealing with a single point of contact and a single renewal date but you can usually also save money on your premium. You also reduce the risk of having an overlap in cover between two policies held with different insurers, which can cause issues in the event of a claim.