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Charity insurance
Charity merger insurance is the planning that keeps liabilities insured when one charity transfers into another, including run-off for departing trustees and continuity for historic claims. It matters because cancelled policies cannot answer claims that arrive years later.
Part of: Charity insurance
In short
When charities merge, policies do not merge automatically. The transferring charity's claims-made covers, such as trustee indemnity, D&O, PI and cyber, usually stop when it closes unless run-off is bought. Its occurrence policies still matter for past incidents, so records must be kept. The receiving charity may inherit liabilities through the transfer or under TUPE. Registering the merger protects legacies but does not deal with liabilities. Trustees should map retroactive dates and abuse cover in due diligence and agree run-off and past-acts cover before the transfer date.
When two charities combine, their insurance policies do not automatically combine with them. Each policy is a contract with a named insured. If the transferring charity is wound up, its claims-made policies, typically trustee indemnity, D&O, professional indemnity and cyber, usually stop responding to new claims unless run-off is bought. Its occurrence policies, typically public and employers' liability, stay relevant for incidents in their policy periods, but someone has to know they exist.
Meanwhile the receiving charity may inherit liabilities through the transfer agreement or by law, without its own programme being set up to absorb them. The job for both boards is to close those gaps before the transfer date, not after the first claim. The charity insurance broker guide covers the wider programme; this page covers the merger itself.
| Step | What the law or guidance says | Insurance point |
|---|---|---|
| Register of charity mergers, Charities Act 2011 Part 16 | The Charity Commission keeps a register of mergers (s305). A relevant merger includes one where a charity transfers all its property to another and ceases to exist (s306). Permanent endowment is treated separately. | Registration mainly protects future gifts such as legacies. It does not transfer or insure liabilities. |
| Notification (s307) | The notification must state that appropriate arrangements have been made for discharging the transferor's liabilities. | Trustees need to show how historic claims will be met, which is where run-off and policy records come in. |
| Pre-merger vesting declaration (s310) | A declaration can vest legal title to the transferor's property in the transferee. Some leases and shares are excluded. | It deals with property, not liabilities. Buildings cover must follow the assets on the vesting date. |
| TUPE, regulation 4 | On a relevant transfer, employment contracts continue with the new employer, and the old employer's rights, duties and liabilities in connection with those contracts pass across. | The receiving charity may face claims from transferred staff about events before the transfer, so employers' liability history matters. |
| Charity Commission CC49 | Employers' liability is compulsory for charities with staff; each employer under a shared policy needs at least the statutory minimum cover. | During a transition period with two employers, both must remain properly insured. |
The Commission's guidance on how to merge charities lists insurance among the issues to consider and warns that merging may trigger pension liabilities. It recommends professional advice on employment and pensions.
Claims-made policies respond to claims first made during the policy period, usually for acts after a retroactive date. That creates two separate questions on a merger.
Protecting the departing trustees. Trustees of a charity that closes can still be sued for decisions they made. Once the charity no longer exists, nobody renews its trustee indemnity or D&O policy. A run-off period, sometimes called an extended reporting period, lets claims made after closure be reported under the old policy for an agreed time, subject to the insurer's terms. Section 189 of the Charities Act 2011 lets charity trustees buy trustee indemnity insurance from charity funds where they are satisfied it is in the charity's best interests, subject to mandatory exclusions.
Bringing past acts into the new programme. Alternatively, or as well, the receiving charity can ask its insurers to extend cover to the transferor's past activities, ideally keeping the transferor's original retroactive date. Insurers usually want full disclosure first, and any known circumstances not notified to the old insurer may fall within the prior known circumstances exclusion. The D&O run-off after dissolution page explains the mechanics.
Abuse cover. Historic abuse is the long-tail risk that most often catches merging charities. Claims can surface decades after events. Where abuse cover was written on an occurrence basis, the policy in force at the time responds, so old schedules and insurer details must be kept. Where it was claims-made, the retroactive date and any run-off decide whether a later claim is covered. See the historic abuse scenario for how this plays out.
| Exposure | Cover that usually responds | Merger action |
|---|---|---|
| Claim against former trustees of the closed charity | Trustee indemnity or D&O run-off | Agree run-off before closure; notify known circumstances |
| Injury to a member of the public before the merger | The transferor's public liability policy in force at the time | Archive policy schedules and insurer details |
| Pre-transfer injury or disease claim by transferred staff | Employers' liability in force when exposure happened | Keep EL certificates and records; confirm who handles legacy claims |
| Historic abuse allegation | Abuse cover on its original basis; see safeguarding and abuse insurance | Map every abuse policy, basis and retroactive date |
| Advice or service error before the merger | Professional indemnity, claims-made | Run-off or past-acts cover on the receiving programme |
| Data breach discovered after the merger | Cyber, claims-made | Disclose legacy systems and data migration plans |
| Damage to transferred buildings | Property cover of the new owner | Add buildings and contents from the vesting date |
A regional charity transfers everything to a national one and is removed from the register. Eighteen months later a funder alleges the former board misapplied a restricted grant. The former trustees are personally named. If run-off was bought on the old trustee indemnity policy, the claim can be notified there, subject to terms. If not, the receiving charity's policy may not respond to acts of a different organisation's board.
An allegation emerges about a residential service the transferor ran thirty years ago. The receiving charity is named as successor. Nobody can find which insurer provided liability cover then. Tracing old policies is slow and sometimes unsuccessful, which is why policy archives belong in merger due diligence.
Staff move across on a TUPE transfer three months after the legal merger. For that period both charities still employ people and both need valid employers' liability cover.
Underwriters asked to extend cover or quote run-off commonly ask for:
Common mistakes include:
Insurance belongs on the merger project plan from the start. A practical sequence:
A charity insurance programme review gives both boards an independent view, and the insurance programme review page explains what that involves. Limits may need to rise for a larger charity; how much trustee indemnity cover is a useful starting point.
Apex arranges charity insurance through mergers and run-off; a broker reads every enquiry.
Leave a name and number and a broker who works with charities will call you back, usually the same working day. Or ask for a free second opinion on your charity’s insurance.
Or email your schedules and renewal date to info@apexinsurancebrokers.co.uk, or call 0117 325 0027.
They may. Trustees can be sued for decisions made while in office, even after the charity is removed from the register. Run-off on the trustee indemnity or D&O policy lets later claims be reported, subject to the insurer's terms. Arranging it before closure is far easier than after.
No. The register of charity mergers under the Charities Act 2011 mainly protects gifts such as legacies left to the old charity. The notification must confirm arrangements have been made for discharging the transferor's liabilities, so trustees still need a plan, which often includes insurance.
It is the date before which acts are not covered under a claims-made policy. If the receiving charity extends its policy to the transferor's past activities but uses a new retroactive date, earlier acts may fall outside cover. Preserving the original date usually needs full disclosure to insurers.
It depends on the transfer terms and on which entity is legally liable. Cover usually depends on the original abuse policy, its basis and any retroactive date. Keeping full records of the transferor's old policies is essential, because claims can arise many years later.
Often a combined programme makes sense, but timing matters. Each employer covered under a shared employers' liability policy needs at least the statutory minimum cover, and claims-made sections need care over retroactive dates. Many charities align programmes at the first renewal after merging.
Send us your current schedules, policy wordings and renewal date. We will review the whole programme and give you a one-page summary for your board: what to keep, what is missing and what to change. No fee and no obligation. Or call 0117 325 0027.
Get a second opinion Get a quoteApex 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, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.
