Trustee indemnity and PI for charities and their boards
Reviewed by Apex Insurance Brokers · Last reviewed 2026-08-05
Serving on a charity board is unpaid, but the responsibility is real. Trustees make decisions about money, staff, contracts and safeguarding, and the law can hold them personally accountable when something goes wrong. Two very different insurances sit around this risk, and they are frequently confused. This guide explains what each one does, who is exposed, and how they fit together for a charity in England, Wales, Scotland or Northern Ireland.
Why trustees can be personally liable
Trustees have legal duties under the Charities Act 2011 and, where they are managing investments or exercising powers, the Trustee Act 2000. They must act in the charity’s best interests, apply reasonable care and skill, and avoid conflicts of interest. If they act outside their powers or breach that duty, they can in principle be made to make good the loss from their own pockets.
How much protection the charity’s legal form gives matters here:
- Unincorporated charities (a trust or an unincorporated association) have no separate legal personality. Trustees contract personally, so their exposure to creditors, landlords and claimants is greatest.
- Incorporated charities — a Charitable Incorporated Organisation (CIO) or a charitable company limited by guarantee — give trustees the benefit of limited liability for the charity’s debts. But incorporation does not protect a trustee from liability for their own wrongful acts, such as a breach of duty or wrongful trading.
In other words, even a well-run CIO leaves individual trustees exposed to personal claims. That gap is what trustee indemnity insurance is designed to fill.
What trustee indemnity insurance covers
Trustee indemnity insurance (often written as part of a directors’ and officers’ — D&O — policy) responds to claims that a trustee has breached their duties, acted negligently, or made a management error while carrying out their role. Typical triggers include:
- Alleged mismanagement of charity funds or a breach of trust made in good faith;
- Employment disputes brought against the board, such as unfair dismissal or discrimination allegations;
- Health and safety, regulatory or Charity Commission investigations naming individual trustees;
- Defamation, breach of confidentiality, or a failure to comply with legislation.
The policy generally pays defence costs as well as any award, which is often the most valuable part — even an unfounded allegation can cost a great deal to answer. Cover usually extends to the charity’s employees and volunteers acting in a management capacity, not only the named trustees.
Deliberate dishonesty, fraud and fines or penalties imposed as punishment are excluded, as is any liability a trustee has taken on personally that the policy was never meant to absorb. Cover protects honest mistakes, not misconduct.
Can the charity pay for it?
Yes. Under the Charities Act 2011, charity trustees in England and Wales can arrange trustee indemnity insurance and pay the premium from charity funds, provided the charity’s governing document does not expressly prohibit it. This was a change from the older position, where the Charity Commission’s consent was needed. Trustees should still check their constitution and record the decision as a proper board resolution. Charities in Scotland and Northern Ireland operate under their own regulators (OSCR and the Charity Commission for Northern Ireland), so it is worth confirming the position for your jurisdiction.
Where professional indemnity comes in
Professional indemnity (PI) insurance answers a different question. It protects the charity — not the individual trustee — when a third party alleges they suffered a financial loss because of professional advice or a service the charity provided. Many charities do exactly this kind of work:
- An advice charity giving benefits, housing, debt or immigration guidance;
- A counselling, health or care organisation delivering professional services;
- A charity providing training, consultancy or accreditation to others;
- A grant-maker or membership body whose recommendations others rely on.
If a service user acts on that advice, suffers a loss, and claims it was negligent, PI covers the charity’s legal defence and any damages. Where the charity is contracted to deliver public-sector services, a funder or commissioner will often require PI as a condition of the contract, sometimes at a specified limit.
Protect your board and your charity’s work with the right combination of cover.
Get a PI quote →Trustee indemnity vs professional indemnity
| Trustee indemnity (D&O) | Professional indemnity | |
|---|---|---|
| Who it protects | Individual trustees, officers and managers | The charity as an organisation |
| What it responds to | Breach of duty, mismanagement, employment claims against the board | Negligent advice or professional services given to others |
| Who brings the claim | Regulators, employees, the charity itself, creditors | Service users, clients, commissioners |
| Typical limits | £1m, £2m or £5m as options | £1m, £2m or £5m, often set by contract |
Building a complete programme
Most charities do not stop at these two covers. A rounded arrangement usually also includes public liability (for injury or damage to third parties), employers’ liability (a legal requirement once you have employees or, in many cases, volunteers), and property, cyber and trustee-related crime cover where relevant. The right mix depends on what your charity actually does — a village hall trust has a very different profile to a national advice service. A broker’s job is to map your activities, legal form and contracts to the cover that matches, without gaps or duplication. Start a quote and we will help you shape it.
Common questions
We’re a small CIO with limited liability — do trustees still need indemnity cover?
Yes. Incorporation limits the charity’s liability for its debts, but it does not protect an individual trustee from a personal claim for breach of duty or negligence. Trustee indemnity fills that specific gap.
Does trustee indemnity cover the charity if a client sues over our advice?
No — that is a professional indemnity claim against the charity, not a claim against a trustee’s conduct. If you deliver advice or professional services, you need PI as well.
Can we pay for trustee indemnity from charity funds?
In England and Wales, yes, provided your governing document does not prohibit it, under the Charities Act 2011. Check your constitution and minute the decision. Confirm the position separately if you are registered with OSCR or the Charity Commission for Northern Ireland.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for your policy wording.