In early September, Visionwest Community Trust went public with the news that it understood Health New Zealand had awarded a five-year, roughly one-billion-dollar Home and Community Support Services contract to a group of businesses, excluding several established charitable providers. Visionwest said the decision could disrupt care relationships for more than a quarter of the 7,000 older and disabled people it supports across Auckland, Bay of Plenty, Waikato and the Rotorua Lakes District, and would affect more than 650 employees delivering care in people's homes. Health New Zealand's internal audit review of the procurement process concluded it was fair, reasonable and transparent.
Whatever view you take of the procurement question, the operational reality is one that hundreds of contracted providers will recognise. A single tender outcome can remove a large share of an organisation's revenue and workforce inside one funding round. Boards respond quickly on the obvious fronts: staff consultation, premises, vehicle fleets, service transition. The insurance programme almost always gets left until the next renewal date, and that delay is where organisations lose money they did not need to lose.
Claims-Made Policies Do Not End When the Contract Does
The most costly misunderstanding in this situation involves how professional indemnity, trustee liability and employment practices policies actually work. These are claims-made policies. They respond to claims notified during the policy period, not to work performed during the policy period. If your organisation delivered home-based support for eight years, cancelled its professional indemnity policy when the contract ended, and a complaint about care delivered in 2024 arrives in 2027, there is no live policy to notify. The claim is uninsured.
The answer is run-off cover, sometimes called extended reporting period cover. It keeps a claims-made policy alive for claims arising from past work after the activity itself has stopped. Run-off is usually purchased for a defined period — three years and six years are common — and is typically cheaper than the original premium because no new work is being performed. It is also almost always cheaper to arrange at the point the policy would otherwise lapse than to reconstruct after a claim has landed.
Organisations exiting a service line should identify every claims-made policy in the programme and decide consciously whether each one needs a run-off period. That decision belongs in the board minutes, because if a complaint surfaces three years later, the question of who decided to leave the exposure uninsured will be asked.
Restructures Generate Employment Claims
An organisation that loses hundreds of care roles is running a restructure, and restructures are the most reliable source of employment disputes in the not-for-profit sector. Personal grievance claims commonly allege procedural defects rather than bad faith: consultation that was too short, a selection matrix applied inconsistently, redeployment options that were not genuinely offered, or a decision that appeared to have been made before the consultation began.
Employment practices liability cover — sold in this country as a standalone policy or, more often, as an extension to a trustee liability or management liability policy — funds the legal costs of defending those claims and, depending on wording, settlements and awards. Two features matter more than the headline limit. The first is whether the policy covers claims by volunteers and contractors, not just employees, which is relevant where support workers are engaged on varied terms. The second is the sub-limit, because employment practices extensions frequently carry a sub-limit well below the main policy limit, and a moderately sized restructure can exhaust it.
The timing point matters as much as the cover point. A policy taken out after the restructure has been announced will exclude the circumstances that were known before inception. The time to check the employment practices section is before the consultation document goes out, not after the first grievance arrives.
Reducing Cover Too Fast
The instinct when revenue falls is to reduce expenses, and insurance is a visible line item. The risk is that an organisation reduces cover faster than it reduces exposure. Several specific traps recur.
Vehicle fleets do not disappear on the day a contract ends. Cars stay on the books, insured and often still driven, while they are sold or redeployed. Cancelling motor cover in advance of actual disposal leaves a period where a staff member drives an uninsured vehicle on organisational business.
Leased premises carry obligations that outlast the service. If the lease runs for another four years, so does the requirement to insure the fitout, the glass and the landlord's interest — regardless of whether the programme that occupied the building still exists.
Public liability limits reflect the severity of a potential claim rather than the volume of activity. Running half as many services does not halve the cost of a serious injury claim. Reducing a limit from five million to two million to save premium creates a gap that only becomes visible in the one claim that exceeds it.
Statutory liability and cyber cover respond to exposures tied to records and obligations rather than to current activity. An organisation still holds client files, still has Privacy Act 2020 obligations in relation to them, and still faces regulatory investigation risk after a service transfers.
The Wraparound Problem
Brook Turner, Visionwest's director of partnerships, made a point in the September release that has a direct insurance consequence. Removing a major service from a charity, he said, "does not affect just one operational division." It changes what the organisation is able to do when people's needs fall outside a single government contract.
Integrated charities cross-subsidise. Revenue from a contracted service supports the infrastructure — the coordinators, the case management systems, the vehicles, the office — that makes housing support, food assistance, financial mentoring and counselling possible alongside it. When the contracted service goes, those other activities continue with a thinner support structure behind them.
From a risk perspective this is the moment when incidents become more likely, not less. Fewer staff supervise the same volunteers. Policies are reviewed less often. Health and safety systems that were maintained because a funder audited them stop being audited. Documentation slips because the person who maintained it has gone. Reducing insurance at exactly the point where operational controls are weakening is the wrong direction of travel, and a broker who understands the sector will say so.
What to Do in the First Fortnight
The practical sequence is short. List every policy in the programme and mark which are claims-made and which are occurrence-based, because only the first group needs a run-off decision. Confirm the employment practices position, including the sub-limit and whether contractors are covered, before any consultation document is issued. Identify which assets and obligations survive the contract — vehicles, leases, equipment, client records — and insure those on their actual timeline rather than the contract's. Ask the broker to model a reduced programme against the exposures that genuinely fall away, rather than applying a flat percentage cut.
Then record the decisions. Charities registered with Charities Services now have a statutory duty to review governance procedures before 5 October 2026 and at least every three years afterwards, and a documented insurance review carried out during a major operational change is exactly the kind of evidence that duty contemplates. It is also the record that protects individual board members if the wisdom of a decision is questioned years later.
Talk to Someone Who Places This Cover
Run-off periods, employment practices sub-limits and the interaction between statutory liability and trustee liability are technical areas where generic commercial advice tends to be thin. charityinsurance.co.nz connects organisations with Registered Financial Service Providers who work with not-for-profit clients and have managed contract transitions before. Get a Quote and a specialist will be in touch within one business day.
Sources: VisionWest Community Trust media release, 3 September 2026; Charities Amendment Act 2023; Charities Services guidance on reviewing governance procedures.
About the Author
Sarah Connell — the CharityInsurance crew are your friendly insurance geeks on a mission to make specialist cover simple and accessible for every NZ charity, sports club, and community organisation.