Insurance explained

How much trustee indemnity cover does a charity need?

Reviewed by the Apex broking team · Last reviewed 2026-10-31

Trustee indemnity cover is insurance that pays legal costs and damages when charity trustees are personally accused of breach of trust or duty. Choosing the limit matters because defence costs usually come out of it.

Part of: Commercial insurance

In short

There is no legal minimum for trustee indemnity insurance, so trustees choose a limit that reflects their charity's realistic worst case. The main drivers are income and reserves, the vulnerability of beneficiaries, staff numbers, fundraising profile, contracts and legal structure. Defence and investigation costs usually sit inside the limit, and in combined policies the limit may be shared with employment and crime cover. Under section 189 of the Charities Act 2011, trustees can buy the cover from charity funds if they decide it is in the charity's best interests, and the policy must exclude fines, penalties and dishonest conduct.

What the limit of indemnity has to pay for

Trustee indemnity insurance pays claims made against trustees personally for wrongful acts in running the charity, such as breach of trust, breach of duty, neglect or misleading statements. The limit of indemnity is the most the insurer will pay, and in most trustee and D&O wordings defence costs are paid from inside that limit rather than on top of it. That single point drives most limit decisions: a claim that never reaches court can still use a large share of the limit in legal fees.

The Charity Commission's guidance, The essential trustee (CC3), says trustees "can be held liable to their charity for any financial loss they cause or help to cause", while noting this is "extremely rare, but not impossible". In practice, the costs that usually matter most are:

defence and representation costs when trustees are questioned in a Charity Commission inquiry under section 46 of the Charities Act 2011, where the policy extends to investigations;
legal costs of responding to claims from beneficiaries, donors, funders, creditors or former staff;
damages or settlements where trustees are found personally liable, subject to the policy terms;
costs of claims brought on behalf of the charity itself against former trustees, which policies often treat differently.

Our main guide to trustee indemnity insurance for charities explains the cover itself. This page is about choosing how much of it to buy.

What usually drives the right limit

There is no statutory minimum for trustee indemnity cover and no formula in Charity Commission guidance. The limit is a judgement about the realistic worst case. Underwriters and brokers commonly look at these factors:

Factor	Why it matters to the limit
Income and reserves	Larger charities attract larger claims and more scrutiny, and creditors look to the board if money runs out.
Beneficiaries	Work with children, vulnerable adults or people in crisis raises the chance of safeguarding inquiries and serious incident reports.
Employees	If the policy includes employment practices cover, staff numbers are a major driver of tribunal claims and costs.
Fundraising and public profile	Public appeals, legacies and media attention increase the scope for complaints, regulatory interest and reputational claims.
Property, contracts and borrowing	Leases, loans and service contracts create obligations that can turn into claims against the board.
Legal structure	In an unincorporated charity trustees sign contracts personally, so their exposure can be wider than in a charitable company or CIO.
Change	Mergers, closures, new services and restructures are when most board disputes begin.

A charity's history matters too. The Charity Commission's serious incident data, summarised on our charity serious incident statistics page, shows the types of event that most often lead to regulatory engagement, such as safeguarding, fraud and data loss.

Any one claim, aggregate and shared limits

Most trustee indemnity and D&O policies are written on an aggregate basis: the limit is the most the insurer pays for all claims in the policy year combined. Some are written on an any one claim basis, where each separate claim has its own limit. The difference is explained in our guide to aggregate and each and every claim limits.

The limit can also be shared in ways that are easy to miss:

Combined policies. Where trustee indemnity sits in a management liability package with employment practices and crime cover, one large employment claim can use the limit that trustees were relying on. See the shared limit trap.
Entity cover. If the policy also covers the charity itself, claims against the organisation can draw on the same aggregate.
Investigation costs. These are often subject to a sub-limit, which may be much lower than the headline figure. Our page on defence costs and investigations cover sets out what to look for.
Additional limits. Some wordings offer an extra limit dedicated to individual trustees, which can protect them if the main limit is used up, subject to the policy terms.

When comparing quotes, a lower headline limit with a separate trustee-only limit can sometimes give individuals more protection than a higher limit shared across several sections.

Illustrative examples

These are illustrative examples to show how the factors combine. They are not recommendations for any real charity.

Example A: a small village hall charity. Unincorporated, run by volunteers, no staff, modest reserves. The main risks are hall hire contracts and a dispute with the local community. A modest limit is often enough, but the trustees check that contractual liabilities they sign personally are considered.
Example B: a regional care charity with 150 staff. A charitable company caring for vulnerable adults, with local authority contracts. Employment claims and safeguarding inquiries are the main drivers, so the board looks at a higher limit, separate employment practices cover and the investigations sub-limit.
Example C: a national charity with a trading subsidiary. Large public appeals, a retail arm and a pension scheme. The board considers whether the subsidiary's directors are covered, how outside directorships work, and whether pension trustee liability needs its own policy.

For a fuller worked scenario, see our charity trustee D&O scenario.

Buying cover from charity funds: section 189

Section 189 of the Charities Act 2011 gives charity trustees in England and Wales a power to buy indemnity insurance for themselves out of charity funds. It comes with conditions that also affect how much cover is sensible:

the trustees must decide that buying the insurance is in the charity's best interests, applying the duty of care in section 1(1) of the Trustee Act 2000;
the policy must exclude fines in criminal proceedings and regulatory penalties, the costs of defending criminal proceedings that end in a final conviction for fraud, dishonesty or wilful or reckless misconduct, and liability to the charity for conduct the trustee knew, or must be assumed to have known, was not in the charity's interests;
the power does not apply where the charity's trusts expressly prohibit the insurance.

The Charity Commission's guidance on charities and insurance (CC49) adds that "the cost must be reasonable and trustees must be sure that TII is in the best interests of their charity." A higher limit costs more, so the board should be able to show why the limit chosen is proportionate. Minuting the decision, the options considered and the advice received is good practice. Our page on trustee indemnity insurance cost explains what affects the premium.

A common misunderstanding: a bigger limit does not widen what is covered. If a claim falls within an exclusion, such as prior known circumstances or dishonesty, no limit will help. Trustee indemnity also does not cover claims about the quality of a service the charity delivered, which is a professional indemnity question; see charity trustee PI vs trustee indemnity.

What to check before buying or renewing

Whether defence costs sit inside or outside the limit, and whether investigations have a sub-limit.
Whether the limit is aggregate or any one claim, and which sections share it.
Whether claims by the charity against its own trustees are covered or restricted.
The retroactive date and continuity: trustee policies are usually claims made, so a gap in cover can leave old decisions uninsured.
Run-off cover for retiring trustees and on merger or closure.
That the proposal form gives a fair presentation of the risk, including known complaints and serious incident reports; see fair presentation under the Insurance Act 2015.
How notification of circumstances works, as explained in our page on notification and circumstances clauses.

Our wider charity insurance guide and our page on D&O for charities cover the rest of a typical programme. Exclusions are covered in detail in trustee indemnity insurance exclusions.

Apex arranges trustee indemnity and charity management liability cover; a broker reads every enquiry.

Sources

Frequently asked

Is there a minimum level of trustee indemnity insurance?

No. There is no legal minimum and the Charity Commission does not set a level. Trustees choose a limit they consider proportionate to the charity's size, activities and risks, and must be satisfied that buying it from charity funds is in the charity's best interests under section 189 of the Charities Act 2011.

Do defence costs come out of the limit?

Usually, yes. Most trustee indemnity and D&O policies pay defence costs from within the limit of indemnity, so a long dispute or regulatory investigation can use up a large part of the cover before any damages are paid. Some policies offer extra limits for individuals, subject to the policy terms.

Can trustees buy more cover than the charity will pay for?

Yes. CC49 notes that trustees are free to buy trustee indemnity insurance out of their own pockets. In practice most charities buy one policy from charity funds, and any personal top-up would be arranged separately and should be discussed with a broker.

Does a small charity need the same limit as a large one?

Not usually. Smaller charities with no staff, limited assets and low-risk activities often choose modest limits. Charities with employees, vulnerable beneficiaries, significant contracts or a high public profile tend to need more, especially where employment claims and investigations share the same aggregate limit.

Will trustee indemnity pay a fine or regulatory penalty?

No. Section 189 requires policies bought from charity funds to exclude fines in criminal proceedings and penalties for regulatory non-compliance. Representation costs during a Charity Commission inquiry may be covered, subject to the policy terms and any investigations sub-limit.

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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, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.