A survey of small charities carried out by insurer Royal & SunAlliance found that of the 20 per cent that did not have trustee cover, 87% said they did not need it.

Perceived levels of risk were very low among small organisations. Nearly half of those questioned said there was no risk at all of a volunteer or the charity itself being sued. Over half said there was no chance of being the victim of adverse publicity. A further 55% said there was no risk of inadvertently breaking the law, 71% of theft of cash and three quarters said there was no chance of a volunteer of employee committing fraud.

Gary Johnson, customer development manager at Royal & SunAlliance, said insurance had become a “last resort” rather than an important part of charity management.

“We really need to somehow progress from thinking of insurance as a last resort and get it more involved in governance so they take a conscious decision about what they do need,” he said.

The findings came as Angel Underwriting warned the sector that trustees and managers were leaving themselves open to attack. “In their altruism it is easy for them to overlook the fact that they are exposed to potentially damaging actions from the wide variety of sources,” said CEO Mark Shreeve. “That their intentions are worthy and that they are selflessly working in the best interests of others can, unfortunately, blind them to the fact that the work is becoming increasingly hard-nosed where pursuing actions for damages are concerned.”