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Charity insurance
Social enterprise and CIC insurance is the set of policies protecting a trading organisation with a social purpose and its directors. CIC directors carry company law duties, so charity cover rarely fits.
Part of: Charity insurance
In short
A community interest company is a limited company subject to extra rules, including a permanent asset lock and oversight by the CIC Regulator. Its directors have the same duties as any company director, so their protection usually comes from directors' and officers' or management liability cover, not charity trustee indemnity insurance. Established social enterprises also need employers' and public liability, professional indemnity for advice or services, property and business interruption, and crime and cyber cover. Grant, contract and investment conditions often set insurance requirements that the board should track.
A community interest company (CIC) is a limited company with extra rules, not a charity, so its insurance starts from company law. The Regulator of Community Interest Companies' guidance says a CIC "operates in the same way as any other company" and that its directors "have the same rights and duties as any other directors". That means directors' personal exposure looks much more like a trading company's than a charity trustee's, and the cover that protects them is usually management liability or D&O rather than trustee indemnity insurance.
Larger social enterprises add trading risk on top: selling goods and services, delivering contracts, employing staff and often giving advice. The programme has to cover all of that while respecting the asset lock and any conditions attached to grants and social investment.
Because CIC directors carry ordinary company director duties, claims can come from shareholders or members, creditors if the company becomes insolvent, regulators, employees and contract counterparties. Unlike charity trustees, they cannot rely on the trustee indemnity insurance power in section 189 of the Charities Act 2011, which applies to charity trustees. A CIC can usually buy D&O cover for its directors in the same way as other companies, subject to its articles.
The guidance states that "all CICs have a compulsory Asset Lock that cannot be removed", meaning assets generally stay in the CIC or pass to another asset-locked body, and cannot be transferred to directors or members. Uninsured losses therefore come straight out of assets the community was meant to benefit from, which strengthens the case for insuring property, income and liability properly. Insurance bought on ordinary commercial terms is normally treated as running cost rather than a transfer of assets, but check any doubts with the CIC's own advisers.
The Regulator's statement of its role explains that it can investigate complaints and, in cases of mismanagement or misconduct, appoint or remove a director. An investigation can create legal costs for individual directors; D&O policies commonly include some cover for regulatory investigation costs, subject to the policy terms.
Funders and commissioners frequently make insurance a condition: minimum public liability or PI limits, cover for the life of a funded project, or the funder noted on a policy. The government's information for funding organisations is aimed at funders assessing CICs; boards should keep a register of every insurance condition they have accepted.
Social enterprises vary widely, but most established ones need a version of the programme below, subject to the policy terms.
| Exposure | Cover that usually responds | Social enterprise point to check |
|---|---|---|
| Claims against directors for decisions, insolvency or regulatory action | D&O or management liability | Insolvency and creditor claims, investigation costs, shared limits |
| Staff injury or illness | Employers' liability (compulsory for employers) | Volunteers, trainees and supported employees |
| Customer or public injury at a café, shop or venue | Public and products liability | Food, goods made by supported workers, events |
| Advice, training, consultancy or support services | Professional indemnity | Contract limits and claims-made run-off |
| Employment disputes | Employment practices liability, often within management liability | Restructures as grants end |
| Fire, flood or theft at premises | Property and business interruption | Lost trading income and grant-funded posts |
| Fraud, cyber attack or payment diversion | Crime and cyber | Funder money held in advance |
Illustrative example 1. A CIC running cafés and a training kitchen loses a major contract and moves into financial difficulty. Creditors later question whether the directors kept trading too long. Because the CIC is a company, the directors face the same insolvency scrutiny as other company directors, and their D&O cover, not trustee indemnity, is what may respond.
Illustrative example 2. A social enterprise providing employability coaching is told by a commissioner that it needs professional indemnity at a stated limit. Its programme has public liability only. It arranges PI before signing and checks that coaching, assessments and referrals are all within the professional activities described.
Illustrative example 3. A charity's social enterprise arm is a trading subsidiary, not a CIC. Its directors are company directors too, but the parent charity's trustees still need to check that the subsidiary is insured in its own name.
Social enterprises that rely heavily on one contract or grant are often asked more about solvency and directors' oversight.
Boards should review cover when the enterprise starts a new trading line, takes on a public contract (see contracted services insurance), accepts a grant or social investment with insurance conditions, changes legal form, takes on premises, or approaches financial difficulty. A yearly charity insurance programme review or broader insurance programme review gives directors evidence that they considered risk properly.
Related reading: D&O for charities, trustee indemnity insurance, PI for charities, employers' liability, business interruption, crime and fraud cover and the charity insurance broker guide.
Apex arranges insurance for social enterprises and CICs; 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.
A CIC is not a charity, so the trustee indemnity insurance power in section 189 of the Charities Act 2011 does not apply to it. CIC directors are company directors, and the usual protection is directors' and officers' or management liability insurance, subject to the CIC's articles and the policy terms.
The company is a separate legal person, so most liabilities sit with it. Directors can still face personal claims about their own conduct, for example breach of duty, insolvency related claims or regulatory action. The CIC Regulator can also remove a director in cases of mismanagement or misconduct. Directors' and officers' cover commonly pays defence costs, subject to the policy terms.
Generally no. The asset lock restricts transfers of assets for less than full value, mainly to members or directors. Buying insurance at a commercial rate is normally ordinary expenditure. If you are unsure about a particular arrangement, such as cover benefiting another body, check with the CIC's legal advisers.
If it gives advice, training, assessments, design or other professional services, PI is commonly needed, and funders or commissioners often require it. Public liability alone usually does not respond to financial loss caused by negligent advice. Check whether every service you deliver is described in the PI policy.
Check which policies and limits are named, whether cover must run for the whole funded period or longer, whether the funder must be noted on the policy, and whether evidence is needed each year. Keep a register of these conditions and compare it with the programme at each renewal, so a change of policy does not breach a grant term.
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.
