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Protecting your ministry with Property and Casualty Insurance

Considerations that can help you get a better quote

Protect your ministry … by buying insurance? The connection may not be immediately obvious. But even in the ministry, things can go wrong. A fire caused by a lightning strike, an auto accident while on a church-sponsored trip, an allegation of misconduct by a staff member — these are only a few of the things that can stop a church's ministry in its tracks.

At times like this, property and casualty insurance is essential to allowing a church or ministry to continue its primary mission of ministry. The trick, of course, is understanding and choosing the proper insurance coverages and limits.

What does property and casualty cover?

At a high level, property and casualty insurance is simply what its name says. It pays for losses to the church's property and for losses caused by "casualty," such as property damage to people or bodily injury allegedly caused by the church. But when you start getting into the details with your agent or insurance company, you find that there are a bewildering array of choices, options and exclusions. Selecting the right set of coverages for your church can itself become a distraction to your ministry.

Understanding property coverages

Buildings, personal property, building machinery (boilers, furnaces, air conditioning), computer equipment, money and securities, musical instruments and fine arts, crime, lost income (giving) — all of these are separately described coverages that typically have separate limits and conditions. That’s where it can get confusing.

For example, a property policy might specify the building is insured for $500,000 and personal property (contents) for $50,000. But that coverage may not adequately protect anything considered fine arts, such as musical instruments or stained glass windows, even though you might consider them part of the "property." These items will be covered only up to $2,500 per item, unless you take out a separate fine arts limit.

Adding to the confusion, a deductible isn't always an absolute figure. For example, you might have a deductible of $500 unless damage is caused by wind, in which case it could be 2% of the property's value.

Further, if the policy is "actual cash value" instead of "replacement cost," the insurance company will only pay for the depreciated value of the property instead of repairing it or replacing it with a comparable product. Be aware: "Actual cash value" insurance policies are much less expensive than "replacement cost" policies, but the older your buildings and property, the less the insurance company will pay for any property claim. This discrepancy can leave you with a big bill to repair or replace any damaged items.

Understanding casualty coverages

Casualty is defined as liability for bodily injury or property damage to a person or organization. Common law in the United States provides the right to sue for monetary compensation anyone who has caused a casualty. Sadly, ministers and ministries are not immune. Courts and juries regularly award liability judgments large enough to put charitable organizations out of business. Their only hope is to have liability coverages that are sufficient to pay for the judgment as well as the cost of legal defense.

For full protection, you need to consider some of these basic liability policies and types of coverage:

  • General liability. Covers injuries arising from your premises and church operations. This includes everything from someone tripping and hurting himself on your property to damage to your neighbor’s property because of your actions.

  • Automobile liability. Covers auto injuries caused by owned vehicles and potentially someone else's vehicle (hired or non-owned autos) when used during the course of church business.
  • Workers' compensation. Covers the employer’s liability for injuries to employees while they are on the job. This is a mandatory coverage in most states.
  • Professional liability. Covers such things as pastoral counseling liability and sexual abuse liability.

  • Directors' and officers' liability. Covers the liability of church officers for decisions or actions resulting in alleged injuries.

  • Other liability policies. Covers personal injury liability, advertising liability, employee benefits liability, employment practices liability, etc.

Be aware: Purchasing only general liability insurance is cheaper, but leaves you unprotected in the event of a claim for pastoral counseling or for abuse by one of your volunteers.

Simplifying the buying decision

How can you get to the right balance of appropriate coverages and lowest cost to protect your ministry? Even if you have access to an insurance expert in your church, you still need to talk to an insurance agent or company representative. He or she has the training, knowledge and responsibility to assist you in making your decisions.

To make sure you receive comparable bids from different insurance companies and agents, make copies of the first few pages of your current policies. These pages — called the declarations pages, or dec pages for short — show your specific church name, locations, coverages, limits and premiums. Provide these copies to the agent(s) you are working with so that they can review the specific options you now have. They can then provide you a competing quote with the same or better options or discuss with you whether you should choose a different set of coverages and options.

Don't be afraid of sharing your dec pages with an agent. The only way he or she will be able to provide a comprehensive, apples-to-apples bid is by reviewing the coverages and options you currently have. Yes, the agent will be able to see your current premium, but that only allows him or her the opportunity to win your business with a lower price.