Insurance considerations, perils and pitfalls

1. COMMUNITY ASSET
MANAGEMENT
INSURANCE CONSIDERATIONS
PERILS & PITFALLS
Euan Drysdale – Keegan & Pennykid

2. BASIS OF THE ASSET
TRANSFER
 There are a variety of ways that the
management of the assets may be transferred,
ranging from a “Management Agreement”
through to full transfer of ownership.
 It’s essential that you clearly understand the
basis on which you’ll proceed and the
respective party responsibilities.

3. OPTIONS
 1. Management Fee paid for the running of
the asset, Local Authority retaining
ownership & control of the Asset.
 2. Assets leased to local Community to
operate and provide facilities, Local
Authority retaining Insurance responsibility
for the Heritable Asset – the building(s).

4. OPTIONS
 3. Asset leased to local Community with
full responsibility for maintenance and
Insurance of all the assets.
 4. Full transfer of ownership of all the
Assets to the local Community, thereby
passing on full responsibility for all the
Insurance requirements.

5. THE BUSINESS MODEL
Depending on which of the business models is
used, will determine the Community’s basic
Insurance responsibilities and any residual
control by the Local Authority or other
bodies.

6. OPTION 1
The Community will need to arrange their
Insurances to cover the operational risks but will
probably need these to tie in to some extent with
requirements laid down by the ceding Authority.

7. OPTION 2
 Again the Community will principally have
to cover their operational risks, but
depending on the arrangement may become
responsible for the Insurance of operational
plant, equipment and fixtures and fittings.
 This might be by a full transfer of
ownership or a lease agreement.

8. OPTION 3
 The Community will be obliged to Insure
all the assets under the terms of the lease
with the interest of the Local Authority
noted in the Insurance.
 If the Authority insists on a policy in joint
names then it should be kept separate from
the policy effected for the operational risks
–WHY?.

9. OPTION 4
A full transfer of the assets will oblige the
Community to effect Insurance for ALL the
assets and operational risks and they will have
to ensure that they can sustain the business.

10. PRINCIPAL RISKS
 Loss or Damage to the Buildings.
 Loss or Damage to Contents, Plant,
Machinery etc.
 Business Continuity following a loss.
 Liabilities – To the Public, To Staff and
Volunteers.
 Governance risks – Management and
Employment Practises Liabilities.

11. BUILDINGS
 If leased, this will be the key document in
determining the extent of cover that you’ll
need if any.
 Are the Buildings “Listed”?
 Importance of getting the Reinstatement
Value right.
 Taking account of VAT.

12. CONTENTS & OTHER
PROPERTY
 Ensure that you have an up to date asset
register that shows current Replacement
values.
 Security & Protection considerations.

13. BUSINESS CONTINUITY
 Disaster Recovery Planning –
 Impact
 Likely recovery period
 Mitigating factors

14. PUBLIC LIABILITY
 What considerations do you need to take
into account in setting the Limit of
Indemnity ?
 What about Local Authority stipulations in
any leasing agreement?
 Are there any particular additional risks that
need consideration in selecting the cover?

15. ABUSE
 What will you need to demonstrate to
ensure that you have appropriate cover for
the risk of allegations of “Abuse” made
against the Organisation?
 There are considerable differences in the
way in which different Insurers may
approach this risk and provide cover – Be
Aware!

16. EMPLOYERS’ LIABILITY
 Will be required even if you run entirely
with Volunteers.
 Appropriate Risk Assessments will be
essential.
 Specific training may be required for certain
tasks.
 What about protective clothing &
equipment?

17. EMPLOYMENT PRACTISES
LIABILITY
 Exactly what does this cover?
 How does it differ from ordinary “Legal
Expenses Insurance”?
 What are the benefits over Legal Expenses
type covers?
 Can you afford NOT to have it?

18. MANAGEMENT LIABILITY
 Cover for Trustees, Directors & Officers of
the Organisation.
 There is a personal “Duty of Care” implicit
in the running of the Organisation.
 Principally covers the “Governance” risks
since the personal assets of Trustees,
Directors or Officers may be at risk.

19. OTHER CONSIDERATIONS
 You may need to consider other types of
cover depending on the nature of your
activities. For Example:-
 Pensions.
 Engineering Inspections.
 Fidelity Insurance.

20. QUESTIONS ????

21. CONTACT DETAILS
Keegan & Pennykid (Insurance Brokers) Ltd.
50 Queen Street
Edinburgh EH2 3NS
Telephone: 0131 225 6005
E-Mail: Mail@keegan-pennykid.com
Website: www.keegan-pennykid.com