Risk Management
Liability Advice to Members working for Charitable and voluntary organisations.
Some professional people are invited to provide their services to charitable organisations, sports and social clubs, youth groups, parish councils and the like. Many are invited to serve as committee or board members.
There are two distinct liabilities to be aware of: professional liability and liability as a Trustee, Director or Officer. These legal obligations and liabilities require careful attention and, ideally, should be protected by separate and appropriate insurance.
No Automatic Cover
You must not assume that you are covered under your own or your firm’s PII policy for any liability that may attach to you in your personal capacity as an advisor to, or Trustee, Director or Officer of any such organisation.
PI Insurance
A typical PII policy covers only legal liability as a Chartered Surveyor.
If you are a Sole Practitioner or Sole Principal and you decide to take on pro bono advisory work as a Chartered Surveyor then, you could be covered for this under your own PII policy.
You should check with your insurer or broker. You would not be covered in your capacity as a Trustee, Director or Officer of the organisation. Separate insurance is required and this is discussed below.
If you are a Partner or a Director of a firm of Chartered Surveyors, once again you must not assume that you are covered automatically by the firm’s policy.
First of all, you should obtain the agreement of your Partners or Co-Directors to carrying out pro bono or charitable work and come to an agreement that any remuneration you receive is payable to the firm and not to you as an individual.
Insurers would usually agree to provide cover under the firm’s policy under these circumstances, with the firm’s permission.
If you are a qualified Surveyor who is employed in a firm, company or public authority you must obtain the agreement of your employer to carry out pro bono or charitable work.
They may or may not agree to you doing this in their name. In many cases they will not agree to it in, which case you will need your own PII insurance.
If your employer does agree to it they must obtain the specific agreement of their insurer to provide this cover and the insurer may require special terms or conditions, depending on the circumstances.
Self-Insured Excess
Where cover is afforded to you by your firm or employer you should ascertain whether you will be responsible, personally, for the self-insured excess on their policy, in whole or in part.
If you are solely responsible you may decide that the risk / reward ratio is too high to make the work worthwhile to you.
Trusteeship & Directorship
If you are already a Trustee, Director or Officer of, for example, a voluntary organisation or sports or social club (whether a registered charity or not) you will almost certainly be relied upon as a “professionally qualified” person.
This reliance may, unreasonably, go further than it should. It is reasonable for your fellow committee or board members to rely upon your professional advice as a Surveyor and, subject to what has been said above, you can be insured for that. It is not, however, reasonable for them to rely upon your professional status as a Surveyor for any other advice whatsoever.
Your professional skills and your general business experience may nevertheless qualify you as a suitable person to act as a Trustee, Director or Officer of the organisation but if you accept this position it must be distinguished from your professional status.
Should you be invited to offer your professional services in connection with, for example, building projects or planning that the organisation wishes to undertake then you may have a conflict of interest between your role as a Chartered Surveyor and your role as a Trustee, Director or Officer.
If you are in any doubt about this you should seek legal advice and you may be advised to resign as a Trustee, Director or Officer for the period that you provide your professional services.
Trustee, Director or Officer Insurance
Suitable trustee’s liability insurance and/or directors & officers liability insurance should be arranged for the entire committee or board to cover the liabilities that can arise as a Trustee, Director or Officer. There are both common law liabilities and statutory and regulatory liabilities.
You should seek experienced advice from your lawyer, insurer or broker to properly understand how these liabilities can arise and how they can be protected by insurance.
Furthermore, it is inadvisable for isolated individuals on a board of trustees or directors to be insured individually as this can create a target and deep pocket for a potential claimant.
Statute of Limitation
Remember also that your professional and Trustee, Director or Officer liability carries on for well over six years from the time that you leave the organisation in a professional or official capacity or from the time that the organisation is wound up.
Limitation periods can in some cases extend to around 15 years and it is necessary to keep insurance in force throughout the whole of this time if you are to avoid being unprotected in your personal capacity. The cost of this insurance should be taken into consideration in the amount that you charge for your fees.
Contact details:
Mr Mark Southwell
Risk and Insurance Manager
T +44 (0)20 7695 1625
F +44 (0)20 7965 1642
E msouthwell@rics.org
E insurance@rics.org
