FINANCE NEWS: Education group hit by cover hike

A group of charities which sends mobile health classrooms to primary schools nationwide could be forced to cut services over a wrangle with their insurer.

Up to 49 mobile health classrooms operated by Life Education Centres could be taken off the road after insurance underwriters Royal & Sun Alliance said that its current cover does not include accident insurance while the centres are in transit.

David Barton, operations director at the Life Education Centres, this week expressed surprise that Royal & Sun Alliance, which has underwritten the group's insurance for more than three years, didn't already assume that mobile classrooms actually moved.

According to Life Education Centres, the underwriter wants another £1,500 per classroom a year to widen the cover. That could lead to some local operators having to suspend their mobile service because they cannot afford the premiums.

"In the current insurance market, there is a problem with getting different cover," said Barton. "It's a fairly specialised cover we need, so not something that many insurers will want to provide."

He has written to the organisation's local operators asking them to decide whether they want to pay the extra premiums or continue the cover as it is and make a legal claim against the broker if its advice proves to be incorrect.

Barton told Third Sector he had already sought legal advice on behalf of the local operators, and the group would be prepared to pursue legal action if necessary.

A spokesperson for Marsh UK, the charity's insurance broker, said the company was not willing to comment on the case because of its guidelines on client confidentiality. Royal & Sun Alliance confirmed that it was in discussions with the broker and charities.

"We are confident the claims will be resolved to the satisfaction of all involved," said a spokesperson for the insurer.

The case comes as it emerged that organisations affiliated to peace group Campaign Against Arms Trade were ending their formal support for the charity because its insurers have refused to provide public liability cover.

The Quakers and the Anglican Pacifist Fellowship are among those that fear being sued if there is a third-party claim against the campaign leading from one of its public protests.

A spokesperson for the Association of British Insurers said third-party cover had not been profitable to insurance companies for 10 years, which had led to a reluctance to provide low-cost cover.

"Charities should talk to their brokers to see if there is a way they can reduce their risk to lower their premium," she said.

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