Aipedia: Charities and trustees

Does trustee indemnity cover AI decisions?

Aipedia, by the Apex broking team · Last reviewed 2026-10-30

Trustee indemnity insurance can respond to a breach-of-duty claim arising from an AI-assisted decision, subject to the policy terms and the three exclusions in Charities Act 2011 s.189(2). Using AI does not of itself remove cover, but how carefully trustees used it can decide the outcome.

Part of: AI in Charities and trustees

In short

No law, regulator or insurer statement found treats AI-assisted decisions differently under trustee indemnity (TII) or charity D&O. A claim that trustees breached their duty is the core risk these policies cover, subject to the wording. Charities Act 2011 s.189(2) bars insurance bought from charity funds from covering fines and regulatory penalties, defence costs where a trustee is convicted of an offence involving fraud, dishonesty or wilful or reckless misconduct, and liability to the charity for conduct trustees knew was not in its interests or did not care about. CC49 sets out how trustees should decide to buy TII. Telling insurers about AI use protects the cover.

What trustee indemnity covers

CC49 s.5.10 describes trustee indemnity insurance as covering trustees' personal liability for claims by the charity or third parties for breach of trust, breach of duty or negligence. Charity D&O policies cover similar ground and may add cover for the charity itself and employment practices. A typical AI-related claim would allege that trustees made a decision, or allowed a practice, without reasonable care: for example relying on an unchecked AI summary, or failing to oversee an AI tool used with beneficiaries.

No Charity Commission or insurer statement specific to AI and TII was found. That means the usual wording applies, and the questions are the usual ones: was there a claim, a wrongful act, and does an exclusion apply?

Structure matters too. CC3 s.10 says that where a charity is incorporated, the charity itself will be liable for a claim, while trustees of unincorporated charities may face claims personally. Trustees of unincorporated charities therefore rely more directly on TII, and incorporated charities may want D&O that also protects the entity.

The three statutory exclusions in s.189(2)

Under Charities Act 2011 s.189, trustees may buy insurance from charity funds covering their personal liability for breach of trust or duty. Section 189(2) says that insurance must not cover:

Exclusion	What it means for AI cases
(a) criminal fines and regulatory penalties	An ICO fine after an AI data breach, or any other regulatory penalty, stays with the charity or trustee.
(b) defence costs where a trustee is convicted of an offence involving fraud, dishonesty, or wilful or reckless misconduct	Rarely engaged by ordinary AI use; relevant if AI was used deliberately to deceive.
(c) liability to the charity for conduct the trustee knew, or must reasonably be taken to have known, was not in its interests, or where they did not care	Reckless AI use against the charity's interests could fall here, for example pressing on with a tool after clear warnings.

Buying TII: what CC49 says

Trustees must decide they are satisfied the insurance is in the charity's best interests (s.189(4)), applying the Trustee Act 2000 s.1(1) duty of care (s.189(5)).
The cost must be reasonable, and trustees can also pay for TII personally.
The power applies unless the governing document expressly forbids such insurance, which CC49 calls "extremely rare"; only then does the Commission need to be approached. It applies even if the governing document bars trustees from benefiting.
Trustees may become personally liable if they unreasonably fail to insure or insure inadequately.
No statutory requirement to buy TII, D&O or PI was found.

Where AI claims may not be covered

Advice to beneficiaries: negligence claims about advice are usually a PI matter, not TII. See PI versus trustee indemnity and AI advice chatbots.
Stolen money after deepfake fraud is usually a crime insurance question.
Bodily injury and abuse are commonly excluded from D&O.
Non-disclosure: if a proposal form asks about technology or AI use and the answer is incomplete, the insurer may have remedies, depending on the wording and the law on fair presentation.

What to tell insurers

Which AI tools the charity uses and for what, especially in advice, safeguarding and fundraising.
Whether the board has an AI policy and how it oversees AI use; see charity AI policies.
How AI output is checked before decisions are taken; see AI-written board papers.
Any complaints or incidents involving AI.

For costs and limits, see trustee indemnity insurance cost and trustee indemnity and PI for charity boards. For regulatory scrutiny, see statutory inquiries and trustee insurance.

How Apex helps

Apex arranges trustee indemnity, D&O and PI for charities. A broker can review whether your cover fits how the charity uses AI and what the insurer needs to know. See the AI in charities hub.

Sources

Frequently asked

Does using AI void trustee indemnity?

Not of itself. No law or insurer statement found treats AI differently. Cover depends on the wording, accurate disclosure and the s.189(2) exclusions. Careless or reckless use against the charity's interests is where problems are more likely.

Can trustee indemnity pay an ICO fine?

No. Charities Act 2011 s.189(2)(a) bars insurance bought under that power from covering criminal fines or regulatory penalties. Related civil claims and defence costs may still be covered, depending on the wording.

Can trustees buy TII if the governing document is silent?

Yes. The s.189 power applies unless the governing document expressly forbids such insurance, which CC49 calls extremely rare. Trustees must be satisfied the cover is in the charity's best interests and that the cost is reasonable.

Do we have to tell insurers about AI use?

If a proposal form asks, answer fully. Even if it does not, telling the insurer how AI is used in advice, safeguarding and decision-making reduces the risk of a dispute later. A broker can help present this.

Check your PI covers how you use AI

Tell us about your firm and the work you do. A broker will review how your current PI treats AI-assisted work, or arrange new cover. No fee for a quote. Or call 0117 325 0027.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.