During the course of our professional careers, and for years after we have retired, many of us will serve some form of committee or board member role for organisations from charities and sports clubs to small and medium sized businesses.
Whilst many would not hesitate to accept the honour of being a key contributor to the success of an institution they care passionately about, few consider the implications of poor governance that they would be personally liable for.
The term ‘jointly and severally liable’ describes the way in which one committee member’s actions are deemed to be representative of all members and thus all are accountable for its consequences.
For many small clubs and community groups, the cost (or the perception of it) can be a barrier to investigating the options for suitable insurance cover.
Below are two alternative approaches to such a scenario:
- If any committee members are included within a Directors & Officers policy of a Limited company, for example, there may an option to request cover be extended to include the activities of the individual on behalf of their small club. There are certain limitations to the cover in doing this, but at least some cover is provided for the individual.
- Economies of scale – if a small club is a member of an association within which all members are similar in size and activity (e.g. a local football league and its 12 member clubs) the bulk buying power of all clubs purchasing a ‘group’ policy would represent a significant saving on each club seeking cover on a ‘stand alone basis’. Again, there are potential limitations to the cover provided but this option still represents a better position than no cover being in place at all.
The above information is provided on a hypothetical basis and does not guarantee cover will be provided regardless of individual circumstances.
Should you wish to receive any further information on this topic, including case studies and claims examples, please contact Dominic Hutt.