AT A GLANCE
How the cover works
Trustees can face personal allegations concerning how an organisation is governed, funded or managed. Trustee Liability insurance can fund defence and covered settlements, while selected entity cover may protect the organisation itself.
The proposal should explain the organisation’s purpose, legal structure, income, assets, funding, beneficiaries, safeguarding, overseas activity, subsidiaries and governance controls.
COVER
What may be covered
- Defence costs for trustees, officers, committee members and other insured individuals.
- Covered damages or settlements arising from alleged breach of duty or wrongful acts.
- Reimbursement where the organisation lawfully indemnifies an insured trustee.
- Selected entity claims and employment-practices liabilities where included.
- Representation costs for certain official investigations or regulatory proceedings.
Cover varies by insurer and applies only as stated in the schedule and policy wording.
BOUNDARIES
Common exclusions and limitations
- Fraud, dishonesty, deliberate misconduct and improper personal benefit after the required determination.
- Known claims, complaints, investigations or circumstances.
- Bodily injury, property damage and professional services beyond any limited extensions.
- Pension, investment, fundraising or overseas activities not within the declared scope.
- Fines, penalties, taxes and liabilities that cannot lawfully be insured.
This is not a complete list. The quotation, schedule and full wording determine the actual cover.
CLAIMS IN PRACTICE
How a claim might arise
01. A regulator investigates alleged failures in oversight and trustees require independent representation.
02. Beneficiaries allege that funds were misapplied or decisions breached the trust’s purpose.
03. An employee brings a discrimination claim against the organisation and named committee members.
These scenarios are illustrative only and do not confirm that a particular claim would be covered.
CHOOSING COVER
Questions worth resolving
- Confirm the legal entity, subsidiaries, trading arms and all categories of office holder.
- Review conflicts-of-interest procedures, delegated authority, minutes and financial controls.
- Disclose safeguarding, grant-making, fundraising, investments and overseas operations.
- Check whether entity and employment-practices sections are included or need separate cover.
- Select a limit allowing for several trustees to require representation during one matter.
CONNECTED RISKS
Related protection to consider
- Management Liability for broader company and employment-practices exposures.
- Professional Indemnity where the organisation provides advice or services.
- Cyber Insurance for personal-data, online-fundraising and systems incidents.
- Crime Insurance for employee dishonesty, fraudulent payments and theft of funds.
QUESTIONS
Frequently asked questions
Can trustees be personally liable?
Yes, depending on the organisation’s structure, the allegation and applicable law. Defence costs alone can be significant.
Does the policy cover the charity or club?
Some wordings include entity cover, but its scope and any shared aggregate limit should be checked.
Are volunteers covered?
They may be included for specified duties, but definitions vary and should not be assumed.
Will it cover safeguarding allegations?
Governance defence may be relevant, but abuse and safeguarding liabilities often require separate, carefully structured cover.
Australian insurance context
For Australian organisations, Trustee Liability Insurance Guide should be considered against the actual activities, location, scale, contracts, assets and risk controls of the business. Insurance requirements and insurer appetite can vary by state or territory and by the way the risk is presented.
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