What is trustee indemnity insurance? A practical UK guide

A TII policy is normally bought in the charity's name for the benefit of the people who govern it. You may also see it labelled trustees' liability, charity directors' and officers' insurance, management liability, or financial and administration liability on a charity package schedule.

The core risk is personal liability arising from a trustee's role: for example, an allegation of breach of trust, breach of fiduciary duty, negligence, mismanagement or maladministration. The policy's most important practical function is often to fund a legal defence while the allegation is investigated or contested.

Exact protection varies. Some policies cover the charity as an entity, regulatory investigations, crisis communications and former trustees; others use lower sub-limits or narrower wording. Read the schedule and full wording, not just the product name.

• Defence costs for civil claims alleging breach of trust, breach of fiduciary duty, negligence, mismanagement, wrongful act or maladministration
• Damages and compensation awarded in civil proceedings, up to the policy limit
• Costs of responding to regulatory investigations by the Charity Commission, OSCR, CCNI, the Information Commissioner's Office (ICO) or the Health and Safety Executive
• Costs of defending disqualification proceedings
• Costs of defending criminal proceedings, except that charity-paid TII cannot cover the defence of proceedings that end in a final conviction for fraud, dishonesty, or wilful or reckless misconduct (s.189(2)(b))
• Defamation defence, often with a sub-limit
• Crisis communications support on some policies; Markel includes access to The Counsel House
• Run-off cover for retired trustees; Ecclesiastical includes up to six years
• Cover for the charity itself, on some package policies

Insurers differ on sub-limits and inclusions. Always read the policy summary and wording, not the marketing page.

Some exclusions are commercial choices by underwriters. The first three are required by statute: s.189(2) of the Charities Act 2011 says charity-paid TII must exclude them, and trustees cannot waive them.

• Fines imposed in criminal proceedings, and penalties payable to a regulator (for example the ICO, HSE or FCA)
• The cost of defending criminal proceedings where the trustee is convicted of an offence involving 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 the interests of the charity (or where they did not care whether it was)
• Deliberate or dishonest acts
• Prior known circumstances and prior claims. Under a claims-made policy, a claim arising from circumstances you already knew about when you took out the policy will not be covered
• Bodily injury and property damage, which public liability covers
• Faulty professional advice given for a fee, which professional indemnity covers
• Contractual liabilities the trustee voluntarily assumed (see the contracts gap below)
• US-jurisdiction claims, excluded by most UK policies
• Pension trustee liability, which needs separate pension trustee liability cover

• Not permission to ignore trustee duties. TII covers honest mistakes: applying the wrong rule, misjudging a conflict, a decision that turned out badly. It does not cover deliberate, dishonest or knowingly improper conduct. The Captain Tom Foundation inquiry turned on conduct of that kind.
• Not cover for every loss the charity suffers. Employers' liability covers injury to staff; it does not cover claims against trustees for breach of duty. Public liability, professional indemnity, cyber and property insurance also address different risks.
• Not a substitute for incorporation. See the contracts gap above.
• Not only relevant to unincorporated charities. Trustees of a CIO or charitable company have limited liability against outside creditors, but can still face claims by the charity (or the Commission acting for it) for breach of duty.
• Not a guarantee that a claim will be paid. Prior-known circumstances, conduct exclusions, jurisdiction, sub-limits and notification rules still apply.

Whether a small charity needs it depends on structure and activity more than income. Use the trustee indemnity insurance decision matrix to work it through.

Directors' and officers' (D&O) insurance is the commercial equivalent of TII for company directors. A generic D&O policy may exclude charity-law breaches and action by the Charity Commission, which makes it a poor fit for a charitable company. For a CIC, the cover is often sold as “management liability”, combining D&O, employment-practices and pension-trustee cover.

Professional indemnity matters for advice, advocacy, training and counselling charities. It covers the charity and its staff, not only trustees, and small-charity packages often sell it alongside TII because the same activity creates both risks.

One incident can engage more than one section, which is why charity package policies are common. Ask the broker which policy responds first and whether defence costs sit inside or outside the stated limit.

Before 2006, trustees needed express authority from their governing document or the Charity Commission to buy indemnity insurance with charity funds. The Charities Act 2006 created a general statutory power, now section 189 of the Charities Act 2011.

The power applies to every English and Welsh charity unless the governing document expressly forbids the purchase. Most constitutions are silent, which means the power applies. If an older trust deed does prohibit TII, the charity can ask the Commission for authority or amend the document; unincorporated charities have had an easier amendment power since 7 March 2024. No advance approval is needed otherwise.

The Commission's guidance, CC49 Charities and Insurance, sets four conditions:

1. The governing document must not forbid the purchase.The relevant clause is usually under “Powers” or “Trustee benefits”.
2. The premium must be reasonable for the charity's resources. A £400 premium may be reasonable for a charity with £25,000 income and not for one with £3,000. Trustees should be able to explain why the cost is proportionate.
3. The policy must exclude the statutorily prohibited indemnities listed under what it does not cover. Charity-specialist policies do; a generic commercial D&O policy may not.
4. The trustees must be satisfied the cover is in the best interests of the charity, not only of themselves, and should minute why.

Trustees who buy TII without meeting these conditions are in breach of trust and could be held personally liable to repay the premium to the charity.

The Charities Act 2022, brought into force in phases between 31 October 2022 and 27 November 2025, did not change the TII regime. It widened the rules on paying trustees for goods as well as services (ss.185–186), which TII sits outside, and gave unincorporated charities the easier amendment power mentioned above.

Scotland:section 68A of the Charities and Trustee Investment (Scotland) Act 2005, inserted by the Public Services Reform (Scotland) Act 2010, gives an equivalent power with the same exclusions. OSCR's current trustee guidance confirms charities may use their funds for trustee indemnity insurance. A Brodies briefing for Scottish trustees describes the cover as “unlikely to provide cover for a breach of duty”, a stricter framing than the English guidance, so treat it mainly as defence-cost protection.

Northern Ireland: section 93 of the Charities Act (Northern Ireland) 2008 mirrors s.189, with the same exclusions, and an express prohibition in the governing document still applies. CCNI covers TII briefly in its Running your charity guidance. Charities registered in more than one jurisdiction should ask the broker to confirm the wording references each relevant statute.

What the Commission cares about is the conduct behind a claim, not the insurance. In the Captain Tom Foundation inquiry (report 21 November 2024), two former trustees were disqualified after findings of misconduct and/or mismanagement, including unmanaged conflicts of interest that led to private benefit, conduct no charity-paid policy can cover. CC3, The essential trustee, says there is no legal protection for trustees who act dishonestly, negligently or recklessly; insurance may give financial protection to trustees who made an honest mistake.

1. Confirm the organisation's legal structure and who signs its contracts.
2. Read the governing document for any clause on insurance, indemnity or trustee protection, and deal with a prohibition first.
3. Check the current insurance schedule for trustees' indemnity, management liability or financial and administration liability.
4. Decide whether the risk justifies cover before comparing prices or providers.
5. Get quotes from charity-specialist insurers or brokers and compare like with like: insured people, limit, defence-cost basis, regulatory cover, exclusions and run-off. Check the s.189(2) exclusions are in the wording.
6. Minute the decision: the cover and limit, the premium, that the trustees considered CC49 (or the Scottish or NI equivalent), and why the purchase is reasonable and in the charity's interests.
7. Treat each renewal as a fresh decision under the same conditions.

For prices, see trustee indemnity insurance cost; for a provider shortlist, see six UK trustee indemnity providers compared.

• Do I need trustee indemnity insurance? →

  A decision matrix by legal structure, activity and exposure.

• Trustee indemnity insurance cost →

  Published prices, premium drivers and bundled-versus-standalone cover.

• Trustee indemnity insurance: six UK providers compared →

  The UK provider shortlist, product strengths and buying watch-outs.

• Unincorporated associations →

  Where the contracts gap matters most, and when to incorporate.

• Charity and community group legal structures →

  Why incorporation can address liabilities that insurance does not.