By Jamion Wolford
What are your church’s current insurance policies and coverage levels? Are these coverage levels appropriate? Who do you contact when you need to report covered events or changes? When was the last time insurance policies and coverage levels were reviewed?
Too often insurance policies are purchased and never revisited. However, insurance policies and coverage levels should be reviewed on a regular basis to determine whether they are still adequate and whether there are more cost-effective options.
Also, the policy documents and agent contact information should be stored in a readily accessible location in the event of a reportable incident, and this information should be known by at least three individuals within the church.
Assessing your church’s insurance needs, reviewing its current insurance policies, and maintaining current policies should be a continuous process. As the activities and assets of the church grow and change, its insurance needs also change. These changes need to be conveyed to current insurance providers to ensure coverages are adequate and up to date.
Even if you do not feel there have been changes to the church’s activities or assets, insurance needs should be reviewed on an annual basis to confirm members are familiar with the policies and questions are answered. Churches should contact current insurance providers to hear any recommendations and to get all questions answered.
In addition to annually reviewing insurance coverages, it is best if they are shopped or bid out every 3-5 years. This will provide confidence the church is participating in the most cost-effective plans and inform members of changes to the insurance industry.
Below, you will find some specific items to consider when reviewing and assessing common church insurance coverages.
- Establish an insurable value on your buildings and contents of those buildings (sanctuary, educational facility, and parsonage). Square footage, estimated cost per square foot to rebuild, type of construction (frame or masonry), and year of construction are criteria to be considered in establishing this value.
- If the altar, church organ, or church pews are fastened to the floor, they are considered to be part of the building value.
- Coverage selected will be on a replacement cost or actual cash value basis.
- Special form protections should be taken with no more than a $2,500 deductible per claim.
- Under property coverage, damage from a flood, water that seeps through a basement wall, and backups of sewers and drains are excluded. You must buy coverage specifically.
- You should buy commercial liability for your premises to include product liability. This will cover slip and fall claims and serving food at fundraisers, social events, and various other church events. It is recommended to buy at least $300,000 of coverage for small churches and at least $1,000,000 for larger churches. This coverage is usually very affordable.
- The commercial liability coverage will also include protection for libel/slander and medical payments originating from the premises. There is no deductible for this coverage.
- Larger churches may want to consider an umbrella policy over their commercial liability and any church vehicles. This would provide additional coverage as a safety net in the event of a larger claim. $1,000,000 is recommended and is normally the most affordable amount to buy.
- Liability coverage for church boards should be considered. This is under the leading of directors and officer’s protection. $1,000,000 of coverage is recommended with a $2,500 deductible per claim.
- Employment practices coverage pertains to claims brought about from harassment, discrimination, and wrongful termination. This is optional, but get a quote to see if it is affordable.
- Sexual misconduct liability coverage is recommended, but it is not always affordable for small churches. Large churches with daycare, camps, and/or educational programs should consider having $1,000,000 of coverage.
- Pastoral counseling liability is inexpensive and should be considered.
- This is like buying your personal car insurance. You will either buy liability only or full coverage on your vehicles.
- Make certain hired and non-owned vehicle liability is part of the protection.
- Only hire drivers at least 21 years of age with a good driving record.
- Purchase $25,000 limit covering all who handle church monies.
- Larger churches depending on the monies in your general, building, or Sunday school funds should consider at least a $100,000 limit.
- If you have employees, full time or part-time, you must buy this coverage. The cost is relatively inexpensive.
If you have questions during your review process or want more information about reviewing your church’s insurance needs, please contact me at email@example.com or at 304-344-8331 Ext. 35. You can also reach out to John Thompson, the Conference Risk Manager, at 877-837-4065. He very graciously assisted in the drafting of this communication.