Charities are being hit by huge increases in their insurance premiums, with some rising by up to 300 per cent.
When charities renewed their cover at the end of the financial year they found insurance companies had raised prices to recover from losses incurred by 11 September and low stock market returns.
Norman Connor, finance director at the Stroke Association, said: "We have just been hit for phenomenal increases. Some policies have doubled and, on average, they have gone up 60 per cent on last year. I am obviously aware of the impact of 11 September and various high-profile liquidations, but the level of this increase came as a surprise.
"We were not given any warning by the brokers that we would be hit by these increases,
Connor said that one reason given by the brokers for the rise was that the charity sector has a record of making a high number of claims.
Young people's charity the Coram Family has seen its professional indemnity cover jump from £3,000 to £10,000. "This is now almost the most expensive part of our insurance cover, costing us nearly as much as all of the buildings, contents and commercial risk policies combined,
said director of finance and administration Jackie Bliss.
The extra cash will come from the charity's reserves.
Insurance companies are responding to a combination of massive losses from 11 September, falls on the stock market, low interest rates and heavy payouts from natural disasters such as floods, according to Ken Pennykid, director of specialist charity insurance brokers Keegan %26 Pennykid.
Four insurance companies have also gone into receivership in the past year.
"Insurers have to balance the books. They have decided that insurance costs have to be covered by premiums. Insurance costs are going up dramatically, in many cases by 100, 200 or 300 per cent,
said Pennykid. "The problem is not just for charities, but smaller charities may be feeling it more because they were paying artificially lower premiums."
According to Pennykid, smaller charities with minimum liabilities as low as £100 have been affected by the decision of insurance companies to stop cross-subsidising minimum liabilities. Last year, Norwich Union announced an increase in its minimum liability to £1,000.
"Charities that rely on a predetermined grant rather than generating their own income will find it difficult,