Insurance is not Charity –
Insurance has evolved as a process of safeguarding the interest of people from loss and uncertainty. It may be described as a social device to reduce or eliminate the risk of loss to life and property. The legal definition focuses on a contractual arrangement whereby one party agrees to compensate another party for losses.
Charity is given without consideration but insurance is not ‘possible without premium. It provides security and safety to an individual & to the society although it is a kind of business because, in consideration of premium, it guarantees the payment of loss. It is a profession because it provides adequate sources at the time of disasters only by charging a nominal premium for the service.
All charities face risks and most charities can benefit from the protection that insurance provides. The right charity insurance cover protects your organization against any loss, damage or liability issues that may arise. There are certain types of insurance that are required by law to cover specific activities of charities and not-for-profit organizations. For example, if your organization employs staff or use volunteers you are required by law to have employers’ liability insurance in place. Charity trustees may consider business interruption insurance for charities that would be financially impacted by their operations being disrupted, or professional indemnity insurance for charities that provide counseling and advice services.