Welcome back! I’m Kevin Millard, Client Director for Gallagher Insurance, and I’m thrilled to present the third installment of this blog series, Local Council Insurance – Risk and Responsibilities. With over 30 years of insurance experience and extensive work with local councils, I know how crucial it is to protect councils against risks that can arise from within their operations.

In this post, we’ll explore three critical areas of insurance for parish and town councils: officials’ indemnity, employee liability, and fidelity guarantee (employee dishonesty) cover. Additionally, I’ll delve into the importance of key person protection and proactive risk management to mitigate these risks.

Blog series

• Insurance Risk and Responsibilities (Part 1 of 4) ‍
• Public Liability (Part 2 of 4)‍
• Employee Liability (Part 3 of 4) - this blog‍
• Cyber Security Insurance (Part 4 of 4)

Disclaimer:

While I have extensive experience in insurance and risk management, I am not a risk management specialist. Gallagher has a dedicated team of experts, and there are health and safety specialists across the country who can assist with your policies and risk assessments.

If you’re unsure about any aspect of your risk management or need a second opinion, I recommend consulting these professionals. They can review your documentation to ensure compliance with the latest legislation and address any overlooked areas.

Officials’ Indemnity

Officials’ indemnity insurance (sometimes known as trustees indemnity) protects councillors and other officials acting on behalf of the council. It responds to wrongful acts, errors, or omissions made during their official duties. Councillors, often unpaid, are vulnerable to personal liability for claims arising from their decisions.

Real-Life Example:

A council faced a claim after accidentally selling a burial plot twice. The error wasn’t discovered until after a burial had taken place, causing significant distress to the claimant. Officials’ indemnity insurance stepped in to cover the costs and legalities associated with this mistake, ensuring the individual councillor was not personally liable.

Documentation Required for Claims:

1. A copy of the allegations from the claimant.
2. Any records or correspondence relevant to the alleged error.
3. The council’s assessment of whether it is responsible for the alleged error.
4. Details of all parties involved.

Employer’s Liability

Employer’s liability insurance protects councils against claims for illness or injury sustained by employees, volunteers, or others working under council control. This policy does not protect employees themselves but ensures compensation is paid when the council is deemed negligent or has breached its duty of care.

Examples of Covered Risks:

1. Physical Injuries: Accidents such as slips, trips, or falls while working on council tasks.
2. Mental Health Issues: Claims related to bullying, harassment, or excessive workloads.

Documentation Required for Claims:

• Dates of the incident(s).
• Details of the circumstances and the nature of the injury or damage.
• Copies of formal or informal claims correspondence.
• Inspection and maintenance records relevant to the incident.
• Copies of risk assessments and any actions taken after the incident.

Insurer Comment:

“Our insured were unable to disclose the required documents and evidence of implementation; therefore, an admission of liability was unavoidable.”

Key Person Cover

Key person insurance is crucial for councils relying on individuals in critical roles, such as clerks. This cover provides financial support if a key employee is unable to work due to illness or injury, helping councils hire temporary staff or manage additional costs.

Real-Life Example:

A clerk serving five councils became seriously ill and was absent for several months. Each council faced increased expenses to manage their workloads, and key person insurance helped offset these costs.

What Key Person Insurance Covers:

• Weekly sums (e.g., £250–£400) for up to six months to cover costs like temporary staff, locum clerks, or extra hours for existing employees.

Documentation Required for Claims:

1. Name and position of the absent individual.
2. Date of the illness or injury and anticipated return date.
3. Copies of invoices, receipts, or payslips for additional expenses.
4. Copies of medical certificates or, in the event of death, a death certificate.
5. Details of any cost savings during the absence (e.g., salary not paid).

Fidelity Guarantee (Employee Dishonesty)

Fidelity guarantee insurance protects councils against financial losses caused by dishonest acts of employees, such as fraud or theft. While incidents of dishonesty are less common today due to stricter controls, the risk remains, particularly when large sums of money are involved.

Coverage Guidelines:

• The policy should cover the maximum funds in council accounts at any one time, typically when precept payments are received.

Risk Management Tips:

1. Dual Sign-Offs: Require two signatures for transactions above a certain amount.
2. Financial Risk Assessments: Regularly review processes for potential vulnerabilities.
3. Background Checks: Vet employees and ensure strong internal controls.

Documentation for Claims:

• A detailed cash book and records of receipts and payments.
• Evidence that financial controls (e.g., dual authorizations) were followed.
• Copies of vouchers, invoices, and supporting documentation.

The Importance of Documentation

As with all insurance claims, proper documentation is crucial. Insurers will request:

1. Records of inspections, risk assessments, and maintenance activities.
2. Incident reports, correspondence, or evidence relevant to the claim.
3. Post-incident actions taken to prevent recurrence.

Without clear evidence, insurers may be unable to defend claims, leaving councils exposed to financial and reputational harm.

Conclusion

Protecting councils from risks associated with employees, officials, and financial dishonesty is essential to maintaining smooth operations and public trust. With the right insurance coverage and robust risk management practices, councils can navigate challenges with confidence.

In the next and final installment, we’ll explore the growing importance of Cyber Security Insurance for local councils. Stay tuned!

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Need a Hand? I’m Here to Help!

I know this can all feel a bit overwhelming, but don’t worry—that’s what I’m here for. Whether you’re unsure about your council’s insurance needs, need advice on risk assessments, or just want to chat about how to protect your community, I’m happy to help.

📞 Call: Kevin J Millard Cert CII – 07458 124847
📧 Email: Kevin_millard@ajg.com

Drop me a message or give me a call—let’s make it simple together!

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