Insurance should not stop voluntary groups from taking on local authority services
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Unity Insurance Services
Monday, May 23, 2016
The continuing public sector austerity measures have resulted in opportunities for charities and voluntary groups to take over the work, services and assets, traditionally carried out and maintained by local authorities. This could be as a result of the local authority stopping their operation or alternatively working in partnership or farming out work to volunteers.
However, finance directors and treasurers in the voluntary sector may have concerns regarding the adequacy of existing insurance cover when taking on any new activities. Similarly, a local authority looking to work in partnership with voluntary groups may view insurance as another obstacle in the process.
Insurance should not be a barrier
On both sides it is sometimes wrongly assumed that the effort of searching for the right kind of insurance and its perceived cost are valid reasons not to pursue new opportunities. This need not be the case, when working with a specialist insurance broker.
Check your existing insurance cover
Children and young people's charities, with a specialist broker, should review the new activities to be undertaken or assets to be transferred to them and should weigh the risks against their existing cover. They may need to change or adapt their insurance cover accordingly.
When taking on new assets or activities, here are some questions you should ask yourself.
- Could additional claims be made against your organisation? Liability insurance can cover the cost of compensation to a third party for personal injury, loss of or damage to property. Would your existing policy cover any new risks and potential claims?
- Will you be giving advice on a professional basis (paid or unpaid)? Will people be taking decisions with financial consequences based on your advice? If so, you may need to consider professional indemnity insurance.
- Are you taking on any buildings? Apart from the obvious security and fire measures, when was the building last valued for its rebuild cost? Once every 5 years is recommended.
- What would it cost to replace any additional property and equipment? Would you need to increase the sum insured on your insurance policy to avoid a shortfall, should you need to make a claim?
- Will you be taking on additional staff or volunteers? If so, you will need to review your Employers' Liability insurance requirements and let your broker know of any additional wage-roll and numbers.
- Do any exclusions and endorsements on your current insurance policy relate to your new activities? You should check the small print of your policy before undertaking new functions, not when you might need to make a claim. Children and young people's charities may have bought a standard "office" policy that is unsuitable to their real needs and are unaware of the significant exclusions which may include their new activities.
Case Study - A Scout District taking on a Council Campsite
As part of its cost cutting measures, a local authority offloaded an activity centre to the local Scout District.
As the insurance broker, Unity Insurance Services visited the campsite to carry out an insurance review for the Scout District. This included arranging a valuation of a Grade II listed building so that the sums insured reflected the value of replacing the assets the Scout District had acquired.
Unity also reviewed the liabilities associated with the various facilities, such as the climbing wall and BMX track, and arranged the necessary liability cover plus loss of revenue cover, should the Scout District be unable to offer these activities.
Unity found an insurance solution for the Scout District, so that they could offer facilities and adventure to local children and young people, previously provided by the local authority, and also generate an additional income stream.
Partnership insurance solutions
In some cases the local authority may outsource a particular function to the voluntary groups rather than simply stopping it altogether.
Where several smaller groups take over a council's activities, buying cover individually could be an expensive option. Working in collaboration with the various voluntary groups and the local authority, a specialist insurance broker can create collective arrangements that will help all parties. These insurance schemes can reduce the cost to both the local authority and the voluntary organisations, while providing a straightforward solution to cover the risks of both parties.
Getting the right advice and cover
Not all insurance policies are the same, and may not cover the risks and potential losses associated with the additional responsibilities you are taking on. You should regularly review your insurance cover as your circumstances may change.
Unity Insurance Services recommends that you speak to a specialist insurance broker who understands how children's charities and youth organisations work and understands the risks you are taking on, so that you get the right cover.
For more information visit the Unity Insurance Services website or call on 0345 040 7702.
