FCA authorised · FRN 724952 0117 325 0027Quote & buy →
Reviewed by Apex Insurance Brokers · Last reviewed 2026-06-23 · Updated 30 September 2026
The core problem TII solves is that a charity trustee’s role carries genuine personal financial risk. A trustee is a volunteer or officer who accepts fiduciary responsibility for other people’s money and objects; if that responsibility is breached and loss follows, the law allows the trustee to be pursued in a personal capacity. TII does not remove the duty — it funds the cost of defending an allegation and, where cover responds, meets the resulting award, so that an honest mistake does not put a trustee’s home or savings at risk. Understanding what the cover does and does not reach is therefore central to good governance, not merely an insurance-buying detail.
Charity trustees owe fiduciary duties to the charity and beneficiaries. Breaches can include:
Trustees can be personally liable for losses caused by these breaches. Liability is usually joint and several — meaning each trustee can be pursued for the full loss, even if others share responsibility.
The exposure is wider than many boards assume. A trustee who was not present at the meeting where a decision was taken, who joined the board after the decision, or who disagreed but did not record dissent, can still be drawn into a claim. Because liability is joint and several, a claimant will often pursue the trustee who is easiest to reach or has the deepest pockets, leaving that individual to seek contribution from the others. In an unincorporated charity — a trust or an unincorporated association — there is no separate legal person to absorb the liability, so contracts, employment and third-party claims land on the trustees personally. Incorporation as a charitable company or a Charitable Incorporated Organisation (CIO) gives the charity its own legal identity and limits members’ liability, but it does not switch off a trustee’s personal exposure for breach of duty, wrongful trading equivalents, or regulatory failings. Trustees also carry a statutory duty of care when exercising many of their functions, and are expected to act with the prudence a reasonably careful person would apply to their own affairs.
The best way to see where TII fits is to trace how an allegation would be handled and which policy pays. These examples are illustrative, not real claims; whether any policy responds depends on its wording and the facts.
The recurring theme is that TII responds to the trustee’s personal conduct as a trustee, while the charity’s operational risks — injury, property, data, employment liability of the entity — belong to other covers. A well-constructed programme makes sure those covers dovetail so a single incident does not fall into a gap between policies.
Trustee indemnity insurance typically covers:
It does NOT cover:
Two structural features are worth understanding. First, most TII wordings are written on a claims-made basis: the policy that responds is the one in force when the claim is first made or the circumstance first notified, not the policy in force when the underlying act occurred. That makes continuous cover and prompt notification of circumstances essential — a gap in the timeline can leave an old decision uninsured. Second, defence costs are usually the most frequently used part of the policy, because even an allegation that ultimately fails has to be investigated and answered; the value of TII is often realised in the legal spend to make a weak claim go away, long before any question of damages arises.
Section 189 applies in England and Wales. It gives charity trustees a general power to buy trustee indemnity insurance out of the charity’s funds, so the governing document does not need to mention it. Under subsection (1) the policy can cover trustees’ personal liability for a breach of trust or breach of duty committed as trustees, and for negligence, default, breach of duty or breach of trust committed as directors or officers of the charity (if it is a company) or of any company carrying on activities on the charity’s behalf, such as a trading subsidiary.
Subsection (2) says the policy must exclude:
Three further conditions apply. The trustees must decide that they are satisfied the insurance is in the best interests of the charity (subsection (4)), and the duty of care in section 1(1) of the Trustee Act 2000 applies when they make that decision (subsection (5)). The power cannot be used if the charity’s trusts expressly prohibit buying the insurance, but it does override a clause that stops trustees receiving any personal benefit from charity funds (subsection (6)). Minute the decision. Charity trustee wordings are generally drafted with the subsection (2) exclusions in place; check yours is.
The Charity Commission’s guidance Charities and insurance (CC49) treats TII as a personal benefit to trustees, which is why a legal power is needed before charity money is spent on it. It says a charity only needs to ask the Commission for authority where its governing document explicitly forbids buying TII, which in the Commission’s experience is extremely rare, and that trustees can always buy it out of their own pockets. CC49 does not list TII among the insurances a charity must hold.
Separately, section 191 lets the Charity Commission relieve a trustee wholly or partly from personal liability for a breach of trust or duty if it considers the trustee acted honestly and reasonably and ought fairly to be excused; the court has a similar power under section 61 of the Trustee Act 1925. Relief is discretionary and does not extend to a trustee’s personal contractual liability, so it is no substitute for insurance.
Scotland and Northern Ireland have their own charity law and regulators (OSCR and the Charity Commission for Northern Ireland). Check the governing document and the regulator’s guidance there before relying on this section.
There is no compulsory minimum limit for trustee indemnity insurance the way there is for, say, solicitors’ professional indemnity. The limit is a judgement about the charity’s size, complexity and the worst realistic claim it could face. The main factors that push a limit up are: the value of assets and reserves under the board’s stewardship; whether the charity employs staff or holds premises; whether it undertakes regulated activity such as care, education or social housing; the volume of personal data it holds; and the number of past and present trustees who need to be covered. Boards also weigh the cost of a fully defended dispute, because defence costs alone can absorb a meaningful share of a modest limit.
The figures below are typical market structures rather than fixed rules; a broker will size the limit to the specific risk.
| Charity profile | Typical limit of indemnity | Indicative annual premium |
|---|---|---|
| Small charity — income under £1m, low-complexity activities, no regulated investment | £1m – £2m | £300 – £800 |
| Medium charity — £1m – £10m income, employees, premises, programmes | £2m – £5m | £600 – £2,000 |
| Larger charity or regulated activities — e.g. care, education, social housing | £5m – £10m+ | £2,000 – £8,000+ |
Two sizing points are easy to miss. The limit is normally an aggregate for the policy year, shared across every trustee and every claim, so a year with more than one dispute can erode it — which is one reason boards with concentrated exposures buy a higher limit than the income figure alone would suggest. And because the limit has to stretch across all insured trustees, a large or long-standing board effectively spreads the same pot more thinly than a small one.
Many charity policies bundle TII with other essential covers in a "charity combined" wording. The bundled approach simplifies administration and often costs less than buying each cover separately.
For incorporated charities (CIOs and charitable companies), trustees ARE directors. They may be covered under D&O or under TII. The distinction:
| Trustee indemnity insurance | Directors’ and officers’ (D&O) insurance | |
|---|---|---|
| Who it protects | Charity trustees; check whether officers, employees and volunteers are also insured persons | Directors and officers of a company |
| Typical claims or investigations | Charity Commission inquiries, beneficiaries, funders, employees, a liquidator | Shareholders, investors, creditors, a liquidator, regulators, employees |
| Power for the organisation to pay | Charities Act 2011 s.189, or an express power in the governing document | Companies Act 2006 s.233 lets a company buy cover for its directors |
| Charity-specific exposures | Written for them: inquiries, restricted funds, the objects and public benefit | Not always contemplated by a commercial wording |
The label matters less than the substance of the wording. What a charity board should check is that the policy contemplates the exposures unique to the sector: Charity Commission inquiries and information notices, the “objects” and public benefit tests, restricted-fund questions, and the mix of employee, volunteer and beneficiary claims that a charity generates. A commercial off-the-shelf D&O policy can leave these under-served, whereas a wording built for charities anticipates them. Where a charity sits inside a group — a trading subsidiary beneath a charitable parent, for example — the programme should make clear which entity’s directors and trustees are insured and remove any doubt about cover crossing the boundary.
No. Unlike some professional indemnity regimes, there is no statutory minimum limit or compulsory requirement for a charity to hold TII. It is a governance choice. Many boards regard it as effectively essential, because without it a trustee’s personal assets are exposed to the cost of defending an allegation, but the decision to buy — and to fund it from charity money — rests with the trustees and should be recorded as being in the charity’s best interests.
Yes, in most cases. In England and Wales, section 189 of the Charities Act 2011 gives trustees a general power to buy trustee indemnity insurance out of charity funds even if the governing document says nothing about it. The trustees must decide it is in the charity’s best interests, the trusts must not expressly prohibit it, and the policy must exclude criminal fines, regulatory penalties, the defence costs of criminal proceedings that end in a conviction for fraud, dishonesty or wilful or reckless misconduct, and liability to the charity for conduct a trustee knew was not in its interests.
No. Policies exclude dishonest and fraudulent acts, and a policy bought with charity funds must exclude the defence costs of criminal proceedings that end in a conviction for fraud or dishonesty, and liability to the charity for conduct the trustee knew was not in its interests. TII is designed to protect the honest trustee who made a mistake or is facing an allegation, not to indemnify deliberate wrongdoing.
Because most TII is written on a claims-made basis, a claim brought after a trustee has left is dealt with by the policy in force when the claim is made, not the one in force during their term. That is why continuous renewal, a run-off or “retired trustees” extension, and prompt notification of any circumstance that could give rise to a claim all matter — they keep former trustees protected for decisions taken while they served.
There is no single answer, but the limit should reflect the worst realistic claim rather than just the annual income. A small, low-complexity charity often sits comfortably with a limit in the low millions, while employees, premises, regulated activity or large data holdings push the appropriate limit higher. Because the limit is usually an aggregate shared across all trustees and all claims in the year, boards frequently choose a limit a step above what income alone would suggest.
No. The Commission’s guidance on charities and insurance (CC49) does not list trustee indemnity insurance among the insurances a charity must hold. If trustees buy it with charity funds they need a power to do so, which section 189 provides unless the governing document expressly forbids it, and they must be satisfied it is in the charity’s best interests.
Sometimes. Under section 191 of the Charities Act 2011 the Charity Commission can relieve a trustee wholly or partly from personal liability for a breach of trust or duty if it considers the trustee acted honestly and reasonably and ought fairly to be excused, and a court can do the same under section 61 of the Trustee Act 1925. Relief is discretionary, does not cover personal contractual liability and does not fund a defence while the claim is running, which is what insurance is for.
Statutory references checked against legislation.gov.uk and GOV.UK on 30 September 2026.
Apex Insurance Brokers Limited arranges trustee indemnity and charity combined insurance for UK charities. FCA firm reference number 724952. We discuss the s.189 position with the trustees, ensure the wording aligns with the governing document, and place cover with insurers who write the charity category specifically.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email info@apexinsurancebrokers.co.uk, or request a quotation.
Get a quote