Your church has many exposures to risk. Some exposures you may want to retain, some may be reduced and others should be transferred to an insurance company.

This is a brief overview of coverage your church should consider in any insurance program. In some markets, the coverage may be expensive or not available.

This outline is not intended to cover every situation that could be present. My intention is to highlight a few of the important basics that should be incorporated into your insurance program. Finances will play a part in your decision regarding which coverage to obtain and which to forego.

Working with Christian ministries is a unique market with specialized needs. I suggest you find an agent who is aware of your ministry and your particular needs.

It is more advantageous to secure a “Package” policy rather than several separate policies. The package will have several lines of coverage combined into one policy. It will include:

• Property
• General Liability
• Medical Payments
• Crime
• Inland Marine

Property

Examples of property include buildings, offices, cabins, maintenance sheds, boat houses; mess facilitates, shower or laundry buildings, etc. All structures owned by your church. Be sure to include any secondary locations or off premises buildings you may own or lease. Rented or leased buildings only require coverage on your property inside the building. The owner of the building is responsible for insuring it.

Property also includes contents. Anything not permanently attached or fixed to a building is considered contents. Examples of contents include office equipment, maintenance tools, school supplies, beds, chairs, kitchen equipment, office computers, etc.

If you have multiple buildings and/or locations you may want to consider “blanket” coverage. This allows the total amount of all buildings and contents available to any one loss. Ask an agent for specific details to see if you could benefit from this type of coverage.
Make sure your policy is written on a “Special Form including Theft” form.

Most commercial policies are written on Broad, Special and Special Form including theft. This provides the broadest protection available.
Your loss settlement should always be on a replacement cost basis. This allows your damaged property to be replaced with a new item.

Regarding leases

Read them thoroughly! Make sure it specifies who is responsible for insuring the A/C units, plumbing, plate glass and improvement. Usually, the landlord will require they be named as “an additional insured.” This shares your coverage with the landlord in the event of a lawsuit against your church while on the property.

General Liability

Liability coverage is utilized when your church is responsible for “damages” to people or property of others. “Damages” has a broad definition. It could include physical damage as well as financial or emotional. Minimum recommended limits are $1,000,000 per occurrence with $3,000,000 aggregate. Make sure you obtain coverage written on an “occurrence form”. This will provide coverage into the future if a claim arises from an incident in the past.

Make sure your liability coverage defense costs are outside the policy limits. An allegation of wrongdoing could generate legal and defense costs into several thousands of dollars.

Sexual Misconduct Liability

This protects the church if an incident or allegation of improper behavior occurs. This should also be written on an “occurrence form”. If a claim should arise in the future, an occurrence form policy will provide defense costs and pay the award if the incident happened during the time period your policy was in effect. Usually, the state or county guidelines are sufficient to meet the insurance company requirements.

I recommended minimum limits of at least $250,000 per occurrence with $500,000 aggregate if you can afford them. This coverage also provides expenses for legal fees for a false allegation.

Directors & Officers Liability

This endorsement or policy protects the people who make decisions on behalf of your church. It should include business administrators, board members, trustees and the Pastor. There are many variations of these policies so make sure you understand who is an insured. The package policy provides general liability protection for the church. Directors & Officers policy protects the individuals acting on behalf of the church. $1,000,000 is the minimum limit to consider.

Non-owned and Hired Auto Liability

This is essential coverage. It is needed when the church either rents a vehicle or allows an individual to use their personal auto for church business. If the church rents a vehicle always purchase the Collision Damage Waiver.

Some people may assume their credit card provides physical damage protection. A rental for church business may void the protection from the credit card. Be sure to check with your credit card first. Make sure when using a credit card for church business (especially if the expense is reimbursable) the person makes a distinction the rental is “on behalf of ______ Church, Inc.”

Note: If somebody uses their personal auto for church business, their insurance is primary in the event of an accident. I suggest your church request proof of insurance from the drivers and request minimum limits of $100,000/$300,000.

Counseling Liability

Covers teachers, volunteers or other employees for counseling. It does not cover people who counsel for a fee. Ministers, youth workers or Sunday school teachers are also covered. Be sure you understand who is covered with this endorsement. Some companies only cover a “named” individual or class of employee. Some companies limit the coverage to spiritual counseling only. Sharing a Bible verse could be interpreted as counseling.

Umbrella Liability

Usually written as a separate policy, an Umbrella policy provides an extra layer of liability protection. If your basic policy limits are exceeded, an umbrella policy will step up and add an extra layer of coverage. Minimum limits are $1,000,000. I recommend at least $2,000,000.

Medical Payments

This is coverage for accidents on your property. You should have a minimum of $10,000. Accidents which happen off premises are usually covered on an excess basis. This means the individuals’ personal insurance would be primary and any out of pocket expenses (deductibles, co-payments, co-insurance) are paid by the company.

Crime

Theft of money, burglary, and embezzlement are covered by the crime provision. Countersignature of checks and independent audits can lessen the likelihood or reduce the damages from a loss. Vandalism is covered under the general property part.

Inland Marine

If your church has specialized equipment or rare valuables you will need this. Anything you may possess that is unique to your ministry should be insured here. If employees take equipment home on a regular basis or equipment is portable this is where you protect it. New construction (i.e. builders risks) office equipment leased, power boats, expensive audio/visual equipment all go here. Radio or television equipment is examples of items that need special coverage.

Employee Benefits

All employees like to feel appreciated even those in full-time ministry.

Employee benefits to consider are retirement, health, and life insurance.

Retirement

Non-profit organizations are eligible for 403(b) retirement programs. These are very similar to 401(k) programs offered by for-profit businesses. The employee can have their current salary reduced before taxes are figured. If an employee leaves the plan is portable.

Health

With the introduction of the Affordable Care Act, it is best to consult with an agent or facilitator who fully understands how this impacts each of us.

Life

Group life insurance can now be written on 2 lives. Very inexpensive.

Key Person Life

This insurance is used to cover a “Key” or valuable person in the event of their death. This may be someone who possesses tremendous value to your church. It could be a charismatic pastor. If this person filled a critical role and they were suddenly gone, is there a contingency plan in place?

How long would his family stay in the parsonage?

This policy provides money paid to the church to ease the transition until a replacement can be found.