Charity trustees

A claim against charity trustees: what to do, and how the insurance responds

A claim against charity trustees is a demand, legal action or allegation that trustees personally caused loss through a breach of trust, breach of duty or negligence. How you handle the first few days matters for insurance, because trustee indemnity and D&O policies commonly make notice, consent and no admission of liability conditions of cover.

Part of: Trustee indemnity insurance for UK charities

In short

When a claim or threatening complaint arrives, keep all records, tell the board and notify the trustee indemnity or D&O insurer promptly. Do not admit liability, settle or incur legal costs without the insurer’s consent. Separately, decide whether to report a serious incident to the Charity Commission. Section 189 of the Charities Act 2011 lets a charity pay for trustee indemnity insurance if trustees decide it is in its best interests, but the cover must exclude criminal fines, regulatory penalties and liability for deliberate or reckless conduct. Personal liability is rare, and the Commission can relieve trustees whose conduct was honest and reasonable.

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Claim, complaint or circumstance: what are you dealing with?

Last reviewed 12 October 2026 by the Apex professional indemnity team.

First work out what has arrived. Insurers treat each category differently, and the wording decides which applies.

A claim is usually defined as a written demand for money or other relief, the start of civil proceedings or, in some wordings, a formal investigation naming a trustee.
A circumstance is something that has not yet become a claim but could reasonably lead to one: a funder querying how a grant was spent, a solicitor’s letter “reserving rights”, or a trustee realising a decision was taken on poor information.
A complaint may be either. One that alleges loss and asks for compensation, or threatens action, starts to look like a claim.

What has arrived	How a policy commonly treats it	Sensible first step
Letter before action or claim form naming trustees	A claim	Notify the insurer now; diarise any court deadline
Employee alleges unfair dismissal and names the board	A claim if a demand or tribunal claim; otherwise a circumstance	Check whether employment practices cover is included
Funder asks for grant money back, alleging misuse	Often a claim against the charity; possibly against trustees	Notify; check whether the charity itself is insured
Charity Commission contact about a concern	Depends on whether the wording covers investigations	Read the investigation cover and notify if it may apply

The examples are illustrative. Your own policy’s definitions govern.

The first 72 hours: a step-by-step checklist

General guidance only, not legal advice. Your policy and your solicitor’s advice come first.

Keep everything. Preserve the letter, emails, board papers and minutes relating to the decision complained of.
Tell the chair and the board. Trustees act collectively; no one should reply alone.
Find the policy. Read the claims conditions in the trustee indemnity or D&O wording: who to notify, how and when.
Notify the insurer, through your broker if you have one. Send the document itself and a short factual summary. Late notice is a common reason cover is disputed. Policies commonly require notice as soon as practicable, so do not wait to see if it goes away.
Do not admit liability or offer money. Most wordings say you must not admit liability, settle or agree costs without the insurer’s consent.
Agree solicitors with the insurer. Defence costs are commonly paid only once the insurer consents, and some policies use panel firms.
Consider the Charity Commission. Decide, and minute, whether this is a serious incident to report (see below).
Manage conflicts. A trustee who is personally implicated should usually step out of decisions on the response.
Plan communications. Agree what staff, funders and the media will be told.

How trustee indemnity and D&O insurance respond

Trustee indemnity insurance protects trustees personally against claims alleging breach of trust, breach of duty or negligence in their role. The Charity Commission’s guidance Charities and insurance (CC49) describes it as cover that directly protects an individual trustee rather than the charity itself. It is often bought within a D&O or management liability policy, which may also insure the charity itself.

On a claims-made policy, cover is usually triggered by the claim being made and notified while the policy is in force, not by when the alleged mistake happened. So a circumstance spotted before renewal often needs notifying to the expiring policy.

Usually responds, subject to the policy terms	Commonly excluded or limited	Usually needs a different policy
Defence costs, once the insurer has consented	Fraud or dishonesty, once established	Injury to visitors or volunteers (public or employers’ liability)
Damages and agreed settlements for wrongful acts	Matters known or notified before the policy started	Damage to the charity’s buildings or contents
Claims by the charity itself, or by a third party	Fines and regulatory penalties	Errors in professional services the charity sells (professional indemnity)
Costs of responding to some investigations, if the wording includes them	Contractual debts the trustees signed for personally	Theft by staff (crime or fidelity cover)

Policies commonly give the insurer the right to approve solicitors, budgets and any settlement, and to allocate costs where only part of a claim is covered.

The Charity Commission: serious incident reporting

The Commission’s guidance How to report a serious incident in your charity defines a serious incident as an adverse event, actual or alleged, that results in or risks significant harm to people who come into contact with the charity, loss of its money or assets, damage to its property, or harm to its work or reputation. “Significant” is judged in the context of your own charity.

Who: responsibility rests with the trustees. It can be delegated to staff or advisers, but all trustees remain ultimately responsible for making sure a report is made.
When: promptly, meaning as soon as reasonably possible after it happens, or immediately after the charity becomes aware of it.
How: through the ‘Report a serious incident’ online form, saying what happened and how you are handling it.
Claims: the guidance gives losing a court case and paying substantial legal fees or damages from charity funds as an example, but says routine litigation pursued in line with the charity’s aims is not expected to be reported.
Annual return: charities with income over £25,000 must declare that there were no serious incidents in the year that should have been reported but were not.

Failing to report an incident that later comes to light may be treated as mismanagement and may prompt regulatory action. If you decide not to report, record why. A Commission report is not an insurance notification, or vice versa.

When can the charity pay for the cover?

Section 189 of the Charities Act 2011 gives charity trustees a power to buy trustee indemnity insurance out of charity funds. It covers personal liability for breach of trust or duty as trustees, and for negligence, default or breach as directors or officers of a corporate charity or a body corporate acting on its behalf.

Three conditions apply:

The trustees must decide they are satisfied the purchase is in the charity’s best interests (s.189(4)), applying the duty of care in section 1(1) of the Trustee Act 2000 (s.189(5)).
The power does not apply if the charity’s trusts expressly prohibit the purchase, but it works despite a general ban on trustees benefiting (s.189(6)). CC49 says trustees only need the Commission’s authority where the governing document explicitly forbids it.
The policy must exclude certain things (s.189(2)), shown below.

Section 189(2) requires the policy to exclude
Fines imposed in criminal proceedings
Sums payable to a regulatory authority as a penalty for regulatory non-compliance
Costs of defending criminal proceedings where the trustee is finally convicted of an offence arising from fraud, dishonesty, or wilful or reckless misconduct
Liability to the charity for conduct the trustee knew, or must reasonably be assumed to have known, was not in its interests, or where they did not care whether it was

For a charitable company, section 233 of the Companies Act 2006 also allows insurance for directors.

How personally exposed are trustees?

Rarely, but not never. The Commission’s guidance The essential trustee (CC3) says it is extremely rare, though not impossible, for trustees to be held personally liable, either to the charity for loss caused by acting improperly, or to a third party whose claim the charity cannot meet.

Legal form matters. An incorporated charity is itself liable, and companies and CIOs can limit trustees’ liability. In an unincorporated charity, trustees sign contracts personally and their liability is unlimited.
Honest and reasonable conduct is protected. CC3 says the charity can normally meet liabilities a trustee incurs where their conduct was honest and reasonable.
Relief. Under section 191 of the Charities Act 2011, the Commission may relieve a trustee wholly or partly from personal liability for a breach of trust or duty if their conduct was honest and reasonable and they ought fairly to be excused. This does not extend to personal contractual liability.
No protection for some conduct. CC3 says there is no legal protection for trustees whose conduct is dishonest, negligent or reckless, and that unauthorised benefits must be repaid.

Insurance matters most where the charity cannot indemnify you, where the charity itself is claiming, or where defence costs mount before fault is decided.

Need trustee cover arranged?

If this affects your business, these are the points a broker will ask about:

Is the charity incorporated (company or CIO) or unincorporated?
What is the charity’s annual income and how many trustees, staff and volunteers does it have?
Are you aware of any complaints, disputes or circumstances that could lead to a claim?
Have there been any serious incident reports or Charity Commission contact in recent years?
Do you need employment practices or investigation costs cover included?

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How Apex places this cover

Apex Insurance Brokers is an independent insurance broker based in Bristol, established in 2009 and authorised and regulated by the Financial Conduct Authority. We are not tied to one insurer: we work with over 30 markets, including Lloyd’s syndicates through wholesale brokers, and every client has a named broker who handles the placement, mid-term changes, certificates for clients and the renewal.

A short fact-find. We ask what you actually do, for whom, under what contract terms, and what has gone wrong before.
A written presentation to insurers. Under the Insurance Act 2015 you must make a fair presentation of the risk. We help you meet that duty, and a well-presented risk gets better terms.
Quotes you can compare. Limits, excesses, retroactive dates, exclusions and premium side by side, with a plain-English recommendation.
No gap in cover. If you are moving from another insurer or broker, the new policy starts before the old one ends and protects your past work.

Related guides

Sources

Frequently asked

What steps should trustees take if a claim is made against them?

Preserve documents, tell the full board and notify the trustee indemnity or D&O insurer promptly, sending the claim itself. Do not admit liability, offer money or instruct solicitors without the insurer’s consent. Decide, and minute, whether it is a serious incident to report to the Charity Commission. This is general guidance; take legal advice.

What does trustee indemnity insurance cover, including legal costs?

It usually covers trustees’ personal liability for breach of trust, breach of duty or negligence, including defence costs once the insurer has agreed them, subject to the policy terms. When the charity pays, section 189 of the Charities Act 2011 requires exclusions for criminal fines, regulatory penalties and liability for deliberate or reckless conduct.

Can a charity pay for trustee indemnity insurance?

Yes. Section 189 of the Charities Act 2011 lets trustees buy it from charity funds if they decide it is in the charity’s best interests, applying the Trustee Act 2000 duty of care. The power does not apply where the governing document expressly prohibits the purchase, but a general ban on trustee benefit does not stop it.

Do trustees have to tell the Charity Commission about a claim?

Not every claim. Serious incidents must be reported promptly, and the Commission’s example is losing a court case and paying substantial fees or damages from charity funds. Routine litigation in line with the charity’s aims is not expected to be reported. Trustees decide what is significant and should record their reasoning.

Are former trustees covered if a claim arrives after they leave?

Possibly. These policies are usually claims-made, responding to claims made while cover is in force. Many wordings include past trustees, but only if the charity keeps the cover going or buys run-off. Former trustees should ask the charity to confirm, subject to the policy terms.

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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. Cover is always subject to the insurer’s acceptance and the policy terms, and this page does not guarantee that cover will be available or on what terms.