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Heritage Insurance Business Panel Q&A: 1

In this week's Business Panel column in the Guernsey Press, Stuart Butler, Client Relationship Director at Heritage Insurance, looks at the potential exposure for islanders who become trustees of LBG charitable organisations.

Question:

I have recently become a trustee of a not-for-profit, limited by guarantee (LBG) charitable organisation. Does that LBG status protect me from legal liabilities?

Stuart Butler replies:

Bluntly, no. You and your committee members are potentially exposed as you go about your fund-raising activities and we’ve lost count of the number of times we have had to say to individuals, ‘you know, you could lose your house if something went wrong…’

For example, many fund raisers put on events and will hire venues at which to hold them. The paperwork the events secretary or similar official signs will generally have a clause that stipulates the host will be responsible for any damage it causes as a result of the event.

So should the brought-in sound system malfunction and start a fire, for instance, those running the venue will look to recover any losses from the hirer.

While the hirer may have limited assets or some protection as an incorporated entity, we are increasingly seeing insurers ‘looking through’ that and targeting the individual, personal assets of those responsible for hiring the venue to recover the money they have paid out to repair the damage – which means going after those behind the organisation and their assets, like property.

It is a growing trend and not merely a theoretical risk. It can also affect local subsidiaries of UK-based charities where extension of indemnity cover is assumed but not rigorously checked.

In short, this underlines the need to take proper advice from a specialist broker so you can continue to raise money for worthy causes risk free.

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Estera is a leading global provider of fiduciary and administration services. The 
acquisition of Heritage Financial Services Group is central to the expansion of 
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