A not-for-profit can face third-party claims even though it does not trade for profit or employ traditional business staff. Its committee needs to understand what public liability covers, which risks belong under other policies, and what must be checked when activities occur outside Australia.
What public liability insurance responds to
Public liability insurance responds to claims by third parties arising from negligence. In practical terms, it is relevant when someone alleges that the organisation, or someone acting for it, failed to take reasonable care and that failure caused injury, death or property damage.
Depending on the policy, the claimed loss may include:
- Death or bodily injury.
- Damage to third-party property.
- Emotional distress or a recognised psychiatric illness, in some policies.
- Consequential loss, such as another business losing expected revenue because negligence caused that loss.
These are possible categories of cover, not an automatic response to every loss. The policy wording, the facts of the incident and any applicable exclusions or conditions all matter. A public liability policy should not be treated as a blanket policy for every dispute involving the organisation.
A programme or service issue is not automatically a public liability claim. The claimant, legal basis and type of loss need to be considered. Likewise, the organisation’s own damaged building or lost income is not automatically a third-party claim. Public liability is primarily about what the organisation may owe to someone else.
The meaning of negligence can be expressed more simply: a claim says that a failure to take reasonable care caused a qualifying loss. For example, public liability may be relevant if:
- A visitor is injured while attending a fundraising event.
- A person is hurt by unsafe premises used to deliver services.
- A volunteer-run activity causes third-party injury or property damage.
- Food supplied at an event makes an attendee sick.
The fact that volunteers or committee members carried out the work does not, by itself, determine which policy responds. The identity and legal position of the claimant remain central.
The main exposures for a not-for-profit
Public fundraising events
A fundraising event brings members of the public into a temporary operating environment. It may involve equipment, temporary structures, volunteers, suppliers, food or other activities outside the organisation’s normal premises.
Public liability may respond if negligence at the event causes an attendee or other third party to suffer injury, death or property damage. The injury does not have to occur at the organisation’s own address for public liability to be potentially relevant. The activity and its location still need to fall within the policy.
A committee should ask whether the policy covers the full range of activities it expects to run. That includes indoor and outdoor events, volunteer roles and any service supplied to attendees. The insurer or broker can confirm whether a particular event falls within the ordinary scope of the policy or requires a separate review.
Event controls are also important. The organisation should document who is responsible for setup, equipment checks, supervision and incident handling. These controls do not replace insurance. They help the organisation identify what it should reasonably be doing before an activity begins.
A certificate of currency is an evidence document that a venue, supplier or other counterparty may ask for. It is separate from the committee’s own review of the policy wording and the event risk controls.
Premises used to serve vulnerable people
Organisations that receive visitors or deliver services in their premises face a distinct exposure. A visitor may allege that a dangerous condition, negligent supervision or an organisation-run activity caused injury or property damage.
The vulnerability of the people served does not create automatic cover. It does, however, make it harder to overlook the organisation’s duties of care, supervision and oversight. The committee should examine the premises and the way services are delivered, including the controls applied for people who may need assistance.
A public liability policy should be checked against the organisation’s actual activities. A policy written for a general office or community meeting may not give a committee enough information to decide whether all service activities are included.
The policy response also depends on what is alleged. Physical injury and third-party property damage are public liability categories. A dispute about the quality of a programme or the fulfilment of a service commitment may raise a different issue. If the alleged loss does not fit public liability, the organisation should ask a qualified adviser whether another policy or risk response is relevant.
Volunteer-run activity
Volunteers may run events, deliver programmes, visit participants, handle equipment or carry out administrative work. The organisation remains exposed to third-party claims arising from negligent activity, but an injured volunteer presents a different claim pattern from an injured member of the public.
Public liability and volunteer insurance should therefore be considered separately. Public liability addresses third-party claims. Volunteer insurance is a separate cover described in Western Australian incorporated association guidance as covering volunteers for personal injury and public liability.
That distinction matters in several situations:
- An attendee alleges that negligent volunteer-run activity caused injury.
- A volunteer alleges personal injury while carrying out authorised work.
- A volunteer is alleged to have caused injury or property damage to another person.
- The organisation must confirm which policy responds to the person making the claim.
A committee should not assume that its public liability policy will handle every claim involving a volunteer. The volunteer policy should be checked for the personal-injury response and its public-liability component. The organisation’s own public liability wording should also be reviewed.
Volunteer insurance does not replace workers compensation. The two covers address different workers and different claim pathways.
Programs and funding delivered overseas
Overseas delivery requires a separate governance and insurance review. A charity may send services overseas, provide funding to an overseas organisation or use a third party to carry out activities. Each arrangement can create a different relationship between the charity, the delivery partner and the people affected.
The ACNC External Conduct Standards apply to a registered charity operating outside Australia. The ACNC says this can include a minor overseas activity or the sending of a small amount of money overseas. It also applies when the activity is conducted through a third party.
The standards require reasonable steps to support appropriate standards of behaviour, governance and oversight. Their purpose includes ensuring that overseas resources and services reach legitimate beneficiaries, are used for charitable purposes and do not expose vulnerable people to avoidable harm.
The compliance obligation does not disappear because delivery is outsourced. The charity must still be able to explain how it assessed and monitored the overseas activity.
There is no filing with the ACNC to demonstrate compliance with the External Conduct Standards. The charity must retain evidence and be able to produce it if requested. A useful governance record may identify the overseas partner, the funding or service arrangement, the assessment undertaken and the oversight provided. The exact record will depend on the activity.
Insurance is a separate question. A committee should ask whether overseas activities and any resulting legal liability fall within its public liability policy. If a third party performs the work, the committee should establish what each party is doing and what evidence the other party requires. It should not assume that either organisation’s insurance automatically responds for the other.
A counterparty may request a certificate of currency as evidence that insurance is in place. That document should be considered alongside the policy wording, the contract and the charity’s External Conduct Standards records. A certificate alone does not explain how overseas governance was managed.
A registered charity that does not operate outside Australia is not subject to the External Conduct Standards. An incorporated association or other not-for-profit should confirm whether it falls within the registered-charity scope before treating those standards as its governing obligation.
Which policy answers which claim
One incident can raise more than one policy question. Start with four separate questions:
- Who is making the claim?
- In what capacity were they involved?
- What type of loss is alleged?
- What caused that loss?
Public liability
Public liability is the starting point for third-party claims involving negligence. The core categories are death, injury and property damage. Some policies also respond to emotional distress, a recognised psychiatric illness or consequential loss caused by negligence.
The claimant is a third party. Public liability is not primarily designed to respond to the organisation’s own damaged property or its internal losses.
Volunteer insurance
Volunteer insurance addresses claims involving volunteers. Western Australian incorporated association guidance describes it as cover for personal injury and public liability.
This is distinct from the organisation’s own public liability policy. An organisation should compare the two documents to see which party each one covers and which loss it is designed to address. The presence of a volunteer public-liability component does not remove the need to understand the organisation’s public liability response.
Directors’ and officers’ liability
Directors’ and officers’ liability is a separate policy aimed at the legal liability arising from the governing role. It responds to the exposure of the directors or officers, subject to the policy wording and the way the organisation is constituted.
For a committee or board, the policy definitions matter. The committee should confirm that its legal structure and the people who make governance decisions are properly addressed. A policy should not be selected merely because the term sounds familiar.
Workers compensation
Workers compensation covers employees for work-related injuries. It is not the same as public liability, volunteer insurance or directors’ and officers’ liability.
Consumer Protection Western Australia states that workers compensation insurance is compulsory for an incorporated association that employs staff. That is the scope of the Western Australian incorporated association guidance. An organisation in another state or territory, or one with a different legal structure, should obtain advice on the requirements that apply to it.
An employee claiming for a work-related injury should not be treated as an ordinary public liability claimant without checking the workers compensation position. Conversely, public liability may still need to be considered for other parties affected by the same activity.
Governance responsibility is not removed by delegation
For an ACNC-registered charity, the ACNC calls the governing body’s decision-makers “Responsible People”. Depending on the charity, they may be called board members, committee members, directors or trustees.
Responsible People may delegate work to staff and volunteers. Senior appointments, approval of strategy, organisational risk management and meetings of members are usually matters that remain with the governing body. Delegation can be appropriate, but it does not remove the need for oversight.
The ACNC governance guide asks Responsible People to:
- Act with reasonable care and diligence.
- Act honestly and fairly in the charity’s best interests and for its charitable purposes.
- Avoid misusing their position or information.
- Disclose conflicts of interest.
- Ensure the charity’s financial affairs are managed responsibly.
- Avoid allowing the charity to operate while it is insolvent.
These governance duties should shape the committee’s insurance decisions. Public liability is one risk-control response. It does not remove the governing body’s responsibility for selecting suitable cover, checking its scope or keeping evidence of the decision.
Directors’ and officers’ liability is the cover aimed at the governing body’s own legal exposure. Public liability is aimed at third-party claims. They are therefore complementary rather than interchangeable.
The committee should retain a clear record of:
- The activities it decided to undertake.
- Who was authorised to manage each activity.
- The public liability and any volunteer, governance or employment covers considered.
- The wording and conditions relevant to those decisions.
- Evidence reviewed for overseas activity.
- Certificates of currency supplied to counterparties.
- Any conflicts of interest or governance concerns considered.
Delegating administration does not mean delegating accountability. The governing body still needs enough information to make informed decisions.
ACNC registration and ATO DGR endorsement are different
There is a common misunderstanding that ACNC registration and Deductible Gift Recipient endorsement are the same step. They are not.
The Australian Charities and Not-for-profit Commission is responsible for registering organisations as charities. The Australian Taxation Office is responsible for endorsing organisations as Deductible Gift Recipients.
The ACNC and ATO are different regulators carrying out separate functions. The ACNC also notes that not all charities are eligible for DGR endorsement.
A committee should therefore distinguish three questions:
- Is the organisation registered as a charity with the ACNC?
- Has it received ATO DGR endorsement?
- What public liability and related covers does its work require?
The first two do not answer the third. Neither status should be treated as proof that suitable insurance is in place.
Setting the public liability level
Public liability insurance is not mandated for charities as a class merely because they are charities. Some states and territories require public liability for certain occupations, as noted in Australian business guidance. Whether a requirement applies to a particular not-for-profit depends on its activities and legal context.
The official sources supporting this guide contain no charity premium, no price range and no mandated public liability limit for charities. There is therefore no responsible general figure to print for all not-for-profit organisations.
The cover level should follow the organisation’s activities, premises, people served and counterparties. A committee should assess:
- Public events and other activities involving members of the public.
- The condition and use of premises.
- Services delivered to visitors or people who may need assistance.
- The nature and authority of volunteer roles.
- Any employee activities.
- Direct and third-party overseas delivery.
- The types of third-party loss described in the policy.
- The level of evidence required by counterparties.
- Any applicable legal or regulatory requirements.
Some policies include emotional distress or consequential loss, but not every policy does. A charity should identify whether those categories are relevant rather than assume they are included.
Questions to put to a broker or adviser
A qualified broker or adviser can help the committee assess both the insurance response and the law that may apply. Useful questions include:
- Does our legal structure, location or activity create any requirement to hold public liability?
- Does the policy respond to our fundraising, premises, service-delivery and volunteer activities?
- If we deliver or fund work overseas, what liability does the policy address and what conditions apply?
- How should a third-party overseas arrangement be described to the insurer?
- Does the policy include emotional distress and consequential loss, or are separate terms needed?
- What is excluded or conditional under the policy?
- What cover applies to an injured volunteer?
- What cover applies to an employee’s work-related injury?
- What does the directors’ and officers’ liability policy do if our committee members are called directors, trustees or board members?
- What evidence must we retain for the ACNC External Conduct Standards?
- Can a certificate of currency be provided when a counterparty asks for evidence of cover?
The committee should also distinguish a legal requirement from a counterparty’s evidence request. An insurer or broker can help identify the former and prepare documents for the latter, but legal advice may be needed to interpret what the law requires.
The practical purchase position is straightforward. Public liability should be selected around the organisation’s real activities and relationships, not around a generic charity label. Its wording should be read alongside volunteer insurance, directors’ and officers’ liability and workers compensation. A broker or adviser should confirm the legal requirements that apply to the organisation. A certificate of currency can provide evidence when requested, but the committee still needs to understand the underlying policy and retain evidence of how its risks are managed.
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