Trustee indemnity and the Charity Commission

Before 2006, trustees who wanted to buy indemnity insurance from charity funds had to obtain express authority — either from their governing document or from the Charity Commission. The Charities Act 2006 introduced a general statutory power to buy TII, now consolidated as section 189 of the Charities Act 2011.

The power applies to every English and Welsh charity unless the governing document explicitly forbids the purchase. The vast majority of modern constitutions are silent on the point (which means permitted, by default). A small minority of older trust deeds expressly prohibit TII — those charities cannot lawfully buy cover from charity funds without first amending the governing document (using the Charities Act 2022 Phase 3 power for unincorporated charities, in force from 7 March 2024).

Section 189(4) imposes mandatory exclusions. Charity-funded TII cannot cover:

• Any liability incurred by a trustee in respect of conduct that the trustee knew, or must reasonably be assumed to have known, was not in the interests of the charity (or where they did not care)
• Any fine imposed in criminal or regulatory proceedings (FCA, ICO, HSE, Companies House)
• Any liability incurred in defending criminal proceedings in which the trustee is convicted of fraud, dishonesty, or wilful or reckless misconduct

Every compliant UK charity TII policy contains wording reflecting these exclusions. They are not optional; trustees cannot waive them.

The Charity Commission publishes its insurance guidance as CC49 Charities and Insurance. CC49 sets out four conditions trustees must satisfy before buying TII from charity funds:

1. The governing document must not explicitly forbid the purchase.Read it. The relevant clause is usually under “Powers” or “Trustee Benefits.” In practice a prohibition is rare; if one exists, the s.189 power cannot override it without amendment.
2. The premium must be reasonable in the context of the charity's resources. A £400 premium on a £25,000-income charity is generally reasonable. The same premium on a £3,000-income charity may not be. Trustees should be able to articulate why the premium is proportionate.
3. The policy must contain wording excluding the statutorily prohibited indemnities.Mainstream UK charity insurers all comply by default — Markel, PolicyBee, Zurich, Ecclesiastical, Ansvar. Generic commercial D&O policies bought without charity-specific wording may not, and are unsafe.
4. Trustees must be satisfied that taking out the cover is in the best interests of the charity — not merely of themselves.The decision should be minuted, with a short note recording why the trustees consider TII justified by the charity's risk profile and resources.

Trustees who buy TII without meeting these conditions are themselves in breach of trust, and the Charity Commission could require them to repay the premium personally.

The Charities Act 2022 came fully into force in tranches through 7 March 2024 and now ss.15–16 (small ex-gratia payments) commenced 27 November 2025. The Act did not substantively amend the TII regime. Trustee indemnity remains governed by s.189 of the 2011 Act, unchanged.

What the 2022 Act did change, relevant to charities thinking about TII:

• The trustee-benefit rules (Charities Act 2011 ss.185–186) were broadened so charities can now remunerate trustees for providing goods (not only services) without Commission consent, subject to the same safeguards. TII is not a benefit under these rules; it is a charity asset protecting the charity's interests.
• A new statutory power for unincorporated charities to amend governing documents (now in force) means trustees of trusts and unincorporated associations can more easily remove an explicit TII prohibition from their constitution if there is one.
• The Commission gained a discretionary power under Charities Act 2022 s.31 to authorise trustee benefits already received where it would be inequitable not to. This sits alongside, rather than displacing, the TII regime.

Commentary from Bates Wells, Browne Jacobson and Stone King at the time anticipated the 2022 Act might “simplify” trustee indemnity. On inspection, the changes are administrative. Treat the TII rules as essentially unchanged since 2006.

Scotland's express statutory power to buy TII was introduced by section 127 of the Public Services Reform (Scotland) Act 2010, inserting section 68A into the Charities and Trustee Investment (Scotland) Act 2005. Before that amendment, OSCR's view was that the s.67 trustee-remuneration rules (which require only a minority of trustees to benefit) ruled out TII because it covers the whole board.

OSCR's current guidance (most recent update June 2024) treats TII as available subject to broadly the same conditions as CC49. The policy must not cover criminal actions, regulatory breaches, or breaches of charity law. Brodies and Anderson Strathern briefings to Scottish trustees use a noticeably stricter framing than the English guidance: “trustee indemnity insurance is unlikely to provide cover for a breach of duty.” Scottish trustees should read the policy with this stricter lens in mind.

For charities operating cross-border between England/Wales and Scotland (or registered in both jurisdictions), the policy wording should explicitly reference all relevant statutes — ask the broker to confirm.

The Charities Act (Northern Ireland) 2008 contains analogous provisions to the England and Wales regime. The Charity Commission for Northern Ireland (CCNI) tracks CC49 closely in its own guidance, with the same four conditions on use of charity funds and the same prohibited exclusions.

CCNI operates a “call-forward” registration model — unlike E&W there is no minimum income threshold, but charities are summoned to register in tranches. Confirm current CCNI guidance for any organisation operating in NI.

1. Read the governing document.Look for any clause about “insurance,” “indemnity,” or “trustee protection.” In nearly all cases the document is silent (which means permitted under s.189). If there is a prohibition, deal with that first.
2. Obtain quotes from charity-specialist insurers. Generic commercial D&O is not suitable. The mainstream UK charity TII market is PolicyBee, Markel, Zurich, Ecclesiastical, Ansvar and Get Indemnity / Howden via broker channels. See best trustee indemnity insurance.
3. Check the policy wording for the s.189(4) exclusions. Every compliant UK charity policy will already exclude fines, fraud, dishonesty and conduct-known-not-to-be-in-interests. If a quoted policy doesn't, reject it.
4. Minute the decision.A short paragraph recording: the cover and limit; the premium; that trustees read CC49 (or equivalent); that they consider the premium reasonable for the charity's size and risk; and that they consider the purchase in the charity's interests. This is your audit trail.
5. Renew with care. Premiums and policy wording both move. Each renewal is a fresh trustee decision; the same CC49 conditions apply.

Charity Commission action specifically arising from TII is extremely rare. We are not aware of any published Commission enforcement decision in the last decade where TII purchase was itself the regulatory issue. In practice, the Commission's interest is upstream: trustees acting in breach of duty often then claim against their TII, and the Commission scrutinises the underlying conduct.

The Captain Tom Foundation inquiry (report November 2024) illustrates the point. The trustees were disqualified for unauthorised personal benefit and conflicts — conduct that no TII policy can lawfully cover under s.189(4). Whether the charity had TII or not was beside the point; the issue was the conduct, not the cover.

The pragmatic Commission concern is the oppositeissue — trustees who think TII protects them from regulatory action and therefore take risks they wouldn't otherwise take. It does not. CC3 (The essential trustee) and OG 100 (operational guidance) both warn against treating insurance as a substitute for good governance.

• Trustee indemnity insurance — the main guide →

  What TII is, when it’s worth buying, the four conditions, and the full decision framework.

• Do I really need trustee indemnity insurance? →

  The decision aid — by structure, by activity, by size. Honest framing for sub-£5k groups.

• What does trustee indemnity insurance cover? →

  The inclusions, the exclusions, and the contracts gap.

• Best trustee indemnity insurance providers →

  The six main UK providers compared on underwriter, sub-limits and target charity size.

• How much does trustee indemnity insurance cost? →

  Real specimen pricing by income band, and the levers that move premium up or down.

• UK community group legal structures compared →

  Incorporation as a CIO is often a better answer than TII alone — the structures explained.

• Charity Commission guidance CC49 Charities and Insurance
• Charities Act 2011 ss.185–186 (trustee benefits), s.189 (TII statutory power), s.189(4) (mandatory exclusions)
• Charities Act 2022 — Phase 3 commenced 7 March 2024 (governing-document amendment power for unincorporated charities)
• Charity Commission Operational Guidance OG 100 (insurance in charities)
• Charity Commission guidance CC3 The essential trustee
• Charities and Trustee Investment (Scotland) Act 2005, s.68A (inserted by Public Services Reform (Scotland) Act 2010 s.127)
• OSCR guidance on trustee insurance (June 2024)
• Charities Act (Northern Ireland) 2008
• Charity Commission, Inquiry Report: The Captain Tom Foundation, 21 November 2024

General information, not legal or insurance advice. For jurisdiction-specific or complex cases, take advice from a charity-sector solicitor.