INSURING YOUR CHURCH: POINTS TO CONSIDER
By: Dieter H. Nickel
BUYING CHURCH INSURANCE: A MAJOR RESPONSIBILITY.
If you are entrusted with the responsibility of securing property and liability insurance for your church, you hold an extremely important position. Though churches are special, they are not immune to the problems of our world and are generally not given any special consideration by our courts.
In today’s legal system, churches are treated like businesses–businesses that are exposed to more opportunity for accidents and property damage than most.
Your potential for encountering lawsuits is high. You have dozens, hundreds or thousands of members and guests visit your church each week. Each is capable of slipping on a loose step or wet floor.
The activities your church sponsors-sporting teams, socials, dinners, picnics, field trips, campouts, retreats, schools and so on-hold tremendous potential for injury. You probably use automobiles occasionally, and may own one or a fleet. You have volunteers doing a wide variety of tasks, sometimes with less than professional skill and equipment. You may also have full- and part-time employees.
For your property exposures, consider the probable high value of the building and contents your church owns. Also keep in mind that your church is likely to be unoccupied for hours or days at a time, making it prone to vandalism, theft and arson.
Your steeple presents an attractive target for lightning. And the use of kitchen equipment, candles and other electrical apparatus increases your chance for fire.
A church with a well-organized safety committee and maintenance program can reduce the chances of an accident or property damage. But it can’t eliminate them.
It is your important responsibility to see that the financial risk associated with an accident or property damage is eliminated or greatly reduced for your church by transferring it to an insurance company.
The decisions you make may one day prove to be among the most important operational decisions ever made at your church.
SELECTING YOUR INSURANCE COMPANY AND AGENT
An insurance policy is only as good as the company behind it and the agent who helps construct it. Select a company that is financially reliable, service-oriented and familiar with the special needs of churches.
The best indicator of the financial stability of an insurance company is the rating it has been assigned by A.M. Best Company. A.M. Best has been an independent analyst of insurance companies since 1899. Look for insurers with high ratings, preferably A+ (Superior) or A (Excellent), for your greatest security. And seek a nonassessable policy, so that your insurance company can’t come to you for a special premium assessment when financial times get rough.
The A.M. Best rating addresses a company’s ability to pay its claims, not its spirit of cooperation in so doing , or the competence and concern of its agents. So, it’s important when selecting a company and agent to ask for and check references. Call three or four churches that are insured by the company, and through the agent, you are considering. Ask these questions:
* Are you pleased with the service you receive?
* Did the agent clearly explain the coverages?
* Is he or she responsive to your questions and concerns?
* Are phone calls returned promptly?
* Does the agent follow up on important matters in writing so that no misunderstandings develop?
* Does the agent meet periodically with your insurance committee?
* If you’ve had a claim, was it handled promptly, courteously and fairly?
In addition, judge the agent for yourself during his or her preliminary work for your church and presentation to your decision makers:
* Does the agent show genuine concern for the well-being of your church?
* Did the agent thoroughly analyze your needs and become familiar with your church operation and activities?
* Does the agent have a good understanding of insurance, and clearly express how it meets your needs?
Many churches feel more secure when dealing with companies that specialize in church insurance. These companies have coverages designed specifically for churches, and time-tested methods for determining the amount of insurance you should carry. Their agents spend a great deal of time in churches, and are typically better at identifying and handling exposures unique to churches. They
may have specialized loss control, underwriting and claims support staff to work on your behalf.
The group insurance option.
Group coverage has never been as popular or commonplace for property and liability insurance as it is for life and health insurance. Nevertheless, some churches do have the option to enroll in a local, state or national property and liability insurance program. This can be advantageous to your church, but isn’t always.
Church insurance is too important and complicated to buy by mail, and too individualized to accept a “canned” program. No two churches are exactly alike in architecture, activities and budgets.
Consider a group program if:
1. Participation does not eliminate or substantially reduce personal service, and
2. Your insurance program can be tailored to your needs.
If you lose personal service and can’t buy the protection you need, the potential savings of a group plan may not be worth the cost.
THE MULTI-PERIL POLICY–YOUR INSURANCE FOUNDATION.
The foundation of your insurance program is a multi-peril policy. It provides coverage for most of your property and general liability exposures. There’s wide variation from company to company, so compare carefully.
Multi-peril property protection.
Determining the right amount of insurance. The amount of insurance you carry on your church building and contents affects how much you receive for a total loss. It can also affect how much you receive for a partial loss.
To arrive at the proper must calculate the cost to replace your building and contents. Original purchase price and market value can usually be ignored.
You may hire a professional appraiser or, as many churches do, accept the value your agent recommends. This makes it critical that you select a company and agent familiar with church architecture and construction costs.
Many policies stipulate that your insurance be not less than 80% of the value of the property at the time you suffer a partial loss. If you fail to have enough insurance to meet the requirement, you may incur a co-insurance penalty. This means you will share in the loss with your insurance company beyond your deductible.
Through examples, the effect of a co-insurance Penalty on your claim settlement becomes clear.
Example A: Failure to meet co-insurance requirement. Assume that the value of your property is $250,000, that the co-insurance requirement is 80%, and that you are carrying only $100,000 of insurance. Also assume that you have a $250 deductible and incur a $40,000 loss.
Step 1: $250,000 (value) x 80%. (co-insurance percentage) = $200,000. This is the minimum amount of insurance you must carry to meet the co-insurance requirement.
Step 2: $100,000 (what you carry) divided by $200,000 (what you are required to carry) = .50, or 50%. This represents the percentage of insurance you actually carry, in relation to the amount you were required to carry to avoid a penalty.
Step 3: $40,000 (the loss) x .50=$20,000.
Step 4: $20,000 – $250 (deductible) = $19,750. $19,750 is the amount you receive from your insurance company. The remaining $20,250 is not covered. The co-insurance penalty cost you $20,000, and the deductible cost $250.
Example B: Adequate insurance to meet co-insurance requirement.
Assume all of the same facts as in the above example, except that you carry $200,000 of insurance.
Step 1: $250,000 x 80%=$200,000.
Step 2: $200,000 (what you carry) divided by $200,000 (what you are required to carry) =1.00, or 100%.
Step 3: $40,000 (the loss) x 1.00=$40,000.
Step 4: $40,000 – $250 (deductible)=$39,750. $39,750 is the amount you receive from your insurance company. You recoup all of your loss except the deductible.
To avoid a co-insurance penalty, set your insurance amount accurately, and keep it up to date with periodic reviews.
You may also ask your insurance company to attach an “agreed value” endorsement to your policy. This removes the co-insurance penalty from your policy.
In periods of moderate to high inflation, purchase “inflation guard” coverage to automatically adjust your limit between policy reviews.
Note that the concern with co-insurance is partial losses. You may have adequate insurance to avoid a co-insurance penalty on partial losses, but inadequate insurance to fully cover a total loss. Insurance to satisfy the co-insurance requirement should be your absolute minimum. You may wish to purchase insurance equal to 90% or 100% of value in order to be better protected against a total loss.
Replacement cost versus actual cash value. Some policies provide for settlement of claims on an actual cash value basis, while others do so on a replacement cost basis. Be aware of what you’re buying.
Most churches want and need replacement cost coverage for their buildings and contents.
The distinction between the two can be technically complicated. But, simply defined, replacement cost is the amount it would cost to repair or replace an item with material of comparable kind and quality. Actual cash value is the replacement cost less an allowance for deterioration, depreciation and obsolescence.
Blanket insurance. Normally, a multi-peril policy will list a limit of insurance for each insured building and a limit for the contents of each building. (“Building” may include far more than the structure itself-items such as pews and organs, for example.)
You may wish to consider having coverage written on a blanket basis instead. This means combining your church and its contents under one limit of insurance. And, if you have more than one building, it can mean combining all buildings (and their contents) under one limit.
For churches with one building, there is an advantage only if your blanket limit is comfortably above the co-insurance requirement, or if there is no co-insurance requirement. Blanketing then serves to better cover contents you acquire over time-additional contents that would make a separate content limit inadequate.
If you have more than one building, blanketing allows you to shift contents from building to building without concern that a specific contents limit at one building is inadequate. Camps find this advantage particularly attractive.
And, with blanket insurance, you can be insured for 100% of the value at each building without purchasing 100% of the combined value. For example, you have two buildings, each having a value of $100,000. With a blanket limit, you could purchase $180,000 of insurance (90% of the combined value is typically required for blanket insurance), meet the co-insurance requirement, and still apply $100,000 to either building.
Because there are coverage advantages to blanket insurance, your insurance company may charge a higher premium for it. Consult with your agent and weigh the advantages against the disadvantages before making your decision.
Antique, rare and highly valuable items. Some items, because of their rarity, antiquity or unique design, may be worth far more than ordinary items of comparable utility. Certain paintings, statues, Bibles, communion ware and intricate stained glass are examples. You and your insurance company should agree in advance on the value of these unusual items, and specifically list them in your policy. This is generally referred to as “scheduling” an item or providing inland marine” coverage for it.
Without this advance scheduling or inland marine coverage, you may have a difficult time proving the value of an item stolen or destroyed. And it may be so valuable that it makes your content limit inadequate–subjecting your church to a co-insurance penalty.
Choosing your coverages. Once you’ve determined how much insurance you need, you may select the causes of loss for which you need and can afford protection. Your building and contents may be insured on a “special” basis or on a “specified cause of loss” basis.
A “specified cause of loss” policy (sometimes referred to as a “named peril” policy) lists the causes of loss for which you are covered, such as fire, lightning, windstorm and hail. Generally, you do not choose on a cause-by-cause basis. Rather, your insurance company groups causes, providing you either a few basic causes or several causes (broad form).
Under a “specified cause of loss” policy, You must prove that your loss was caused by a listed cause of loss before you can file a claim.
A “special” policy (sometimes referred to as “all risk” or “comprehensive”) covers all direct causes of loss except those which are listed as exclusions-such as wear and tear, war, flood and earthquake. To file a claim, you need only prove that a loss occurred–and not its cause. To deny your claim, your insurance company must prove that the cause of loss is specifically excluded.
With its more comprehensive coverage and shift of burden of proof to the insurance company, a “special” policy is preferable for most churches. It does cost more than a “specified cause of loss” policy, but the greater security is well worth it.
Even with a “special” policy, there are some coverage concerns. The most common concerns are the treatment of signs, glass, building ordinances, earthquakes and floods.
Signs: The sign on your church lawn is probably covered by your multi-peril policy. Signs at locations other than your church may not automatically be covered, or may be insured for an inadequate amount. Tell your agent where your signs are located, and their value, so they can be properly insured.
Glass: It is common for insurance policies to place limitations on the amount you may collect for glass broken accidentally or by vandals. Typical limitations are $250 per pane, with $1,000 maximum for all panes. If the value of your windows–individually or collectively–exceeds your policy’s limitations, purchase “full” glass coverage.
Building Ordinances: Some communities have ordinances restricting the repair of heavily damaged buildings, causing you to make costly modifications or to rebuild entirely. Watch out for them! Your policy may need to be endorsed to account for increased building costs or demolition costs resulting from compliance with such ordinances. Contact your local building inspector to learn which ordinances may affect your church.
Earthquakes and Floods: Rarely are earthquakes and floods automatically covered under a multi-peril policy. If you are located in a flood plain or area subject to earthquakes, your insurance agent can assist you in obtaining coverage–either through his or her own company or through government programs.
Theft and employee dishonesty. Theft coverage for your building and contents items is usually included under a “special” policy, and is available as an option under a “specified cause of loss” policy. It is therefore treated like any other covered cause of loss, and subject to the policy limits.
Theft of money and securities is treated differently. You must generally purchase separate coverage for them–at a limit equal to your average weekly offerings. With some policies, the amount you purchase for normal offerings is automatically increased on special holidays–such as Christmas and Easter–when offerings are much greater than normal.
If you have fund-raising projects that generate more income than a normal offering, advise your insurance agent so that adequate coverage is provided.
For greatest security, purchase money and securities coverage that includes disappearance and destruction, as well as theft. This gives you coverage when money is missing but you can’t prove it was stolen. It also covers money destroyed by fire or by other means.
Another concern for churches is the theft of money or of other property by employees and volunteers. In insurance jargon, this is considered employee dishonesty, not theft.
Usually, your best protection for employee/volunteer dishonesty is to purchase a blanket bond. Set your limit at the greatest amount someone could steal over time without getting caught or before leaving the position of responsibility. Include your Sunday offerings and money from fund raisers, building funds, and other income and accounts.
Extensions or additions of coverage. Most multi-peril policies automatically include several coverage “extensions” or “additions.” Some are very important. It is in this area that you will normally find coverage for contents taken off premises, extra expenses of operation following a loss, personal property of members, guests and others, and many other coverages that can save you money at
the time a loss occurs.
Some companies rely heavily on these coverages to differentiate their policy from their competitors’. Compare carefully, identifying those that are meaningful to your church.
Loss of income protection. If your church depends on rental property or tuition fees for operational income, consider purchasing special coverage to continue the income if it is interrupted by a fire or other cause of loss.
For example, your church owns an apartment house that generates $500 per month in net income. If it was destroyed by fire (or wind, etc.), your church would lose the income. Insurance is available to protect you from this kind of loss.
A similar coverage is available for loss of rental value. Assume your church provides a parsonage for the pastor. It is heavily damaged by fire and you must rent another home for the pastor while repairs are made. The cost of renting this temporary home can be covered by insurance.
Insurance for buildings under construction. If you plan to construct a new building or add to an existing one, some important insurance concerns need to be addressed.
Builder’s Risk Insurance: You may add builders’ risk coverage to your current multi-peril policy or purchase a new policy for the building under construction. It makes little difference.
Set the limit of insurance equal to the estimated completed value of the building or addition. This value should be the amount a general contractor would charge to rebuild-even if you use volunteer labor for the actual construction. A damaged structure can be far more difficult to repair than it is to build the first time. Volunteers may lack the skill to make major repairs, or the interest to repeat their task. You may incur penalties–like co-insurance penalties–if you underinsure.
Certificates of Insurance: Obtain certificates of insurance from your general contractor, showing coverage for comprehensive general liability, XC&U (explosion, collapse and underground damage to property) liability, products and completed operations, umbrella liability, workers’ compensation and automobile liability. Your insurance company may ask you for these certificates.
Construction Bonds: Several types of bond coverages are available, and it is best to seek an attorney’s advice regarding bonds you should require from your contractor. The most common bonds you will want are performance bonds and labor and material payment bonds. The performance bond “guarantees” that the contractor will meet the terms and conditions of your contract, or pay a penalty. Labor and material bonds are used to ensure that workers are paid and materials are paid for, thereby keeping your church free of liens.
Deductibles. Deductibles are applicable to most property claims, and typically range from $250 to $1,000 or more per occurrence. The higher your deductible, the lower your premium. Base your decision on your ability to pay and the premium savings you may enjoy.
MULTI-PERIL LIABILITY PROTECTION.
Insurance for when you’re sued. Every church should obtain insurance that responds to lawsuits involving bodily injury, personal injury, property damage and sexual misconduct or molestation. The insurance should apply whether the injury or damage occurs at or away from church, and is caused by the negligence of a member, employee or virtually anyone else acting on your behalf.
Most multi-peril policies will protect your church against lawsuits alleging bodily injury and property damage, though there may be some subtle but important variations from policy to policy.
Fewer policies provide coverage for personal injury and sexual misconduct/molestation. Personal injury includes libel, slander, invasion of privacy and other infringements on the rights of an individual or organization.
In most churches, no one would intentionally cause personal injury. But it can, and does, happen unintentionally, and lawsuits are filed. Even lawsuits without merit can be expensive to defend.
Reports of sexual misconduct and molestation, especially child sexual abuse, occur with frightening frequency at churches and church-related organizations. While no one knows if the actual incidence of these offenses is on the rise, reports and legal action against churches are rising rapidly.
Some insurance companies, fearing excessive exposure from lawsuits, have chosen to exclude coverage for these acts. Some, recognizing the serious financial consequences to a church from this type of lawsuit, have chosen to specifically include coverage for the church and individuals wrongly accused of an act.
Purchasing insurance for this exposure is a wise financial decision for your church. It should not be viewed negatively–coverage does not apply to individuals who actually commit the offense, so you are in no way condoning the act. Instead, you are recognizing that the problem is real, and that despite all your precautions, it could happen at your church. And you are protecting your church
and innocent employees, volunteers and members.
Special activities require special protection. Depending on the activities of your church, you may need one or more special liability coverages. A few of the most common coverages are explained below.
Fire Legal Liability: If you use facilities your church doesn’t own, you may be legally responsible for damage to them–including fire. Some multi-peril policies automatically provide a limited amount of insurance for this, but very likely an inadequate amount. Advise your agent so that your policy may be endorsed to provide sufficient protection.
Schools and Day Care Centers: Liability protection for teachers is not always automatic. Make sure your teachers are covered. For greater protection, it is recommended that corporal punishment coverage also be purchased–even if you have guidelines that prohibit corporal punishment.
Alcohol: Many policies exclude coverage for damages arising out of the use or sale of alcoholic beverages. If you serve these beverages at church functions, have your policy include “host liquor liability” coverage. If you are engaged in the sale of alcoholic beverages, consult with your attorney and agent. A separate “liquor liability” policy may be called for.
Broadcasting/Publishing: Your primary exposure from broadcasting and publishing is personal injury –libel and slander. If your policy provides personal injury coverage, it may include incidental activities like your church bulletin or Sunday morning radio service at a local station. But virtually no multi-peril policy protects you if you are in the business of publishing or broadcasting. A separate policy is needed for this.
Watercraft: Many policies provide automatic coverage for liability arising out of the use of small, non-owned watercraft. Separate coverage may be needed if you own a watercraft or use large watercraft.
Counseling: Most clergy appreciate this coverage and feel more comfortable handling delicate matters because of it. Counseling liability insurance is inexpensive protection for your church and clergy.
Products: For churches, “products” usually means food. Many multi-peril policies automatically protect you for products liability (food poisoning, for example) if the product is served at your church. You may need a special endorsement to cover products distributed away from your church.
Worldwide Travel: Rarely does a multi-peril policy provide liability protection for acts which occur outside of the United States or Canada. Special provisions should be made if you plan to travel outside the policy territory. (Similar constraints apply to property taken outside the policy territory.)
Insurance for vehicles you don’t own.
If you ever rent or borrow a vehicle, or ask someone to drive on behalf of your church, you create a liability exposure for your church. If the vehicle is involved in an “at fault” accident, your church will probably be named in a lawsuit.
You need not rely on the driver or vehicle owner to have adequate insurance to protect your church. Purchase “hired and non-owned” automobile liability insurance-it usually can be made part of your multi-peril policy.
Errors and omissions insurance.
A good multi-peril policy will include your directors, officers and trustees as insureds for lawsuits involving bodily injury, property damage and personal injury. But almost no multi-peril policy automatically covers them for errors and-omissions-“bad judgement” types of lawsuits.
Such coverage is available from some companies, either as an option in your multi-peril policy or as a separate professional liability policy. This coverage is correctly referred to as “directors and officers” or “directors, officers and trustees” insurance.
Having this insurance may help you get more capable people involved in your church operations. It lets them make decisions freely and in your best interest, without undue fear of reprisal from those who might take legal issue with their decisions.
Setting adequate liability insurance limits. Imagine what a jury might award to a 30-year-old husband and father of three children who is permanently disabled. Medical bills, physical therapy, handicap modifications to home and vehicles, lost income, and pain and suffering may reach six and seven figures.
There is no formula for determining the right amount of liability insurance. And a “small” church usually needs as much liability coverage as a large church. Consider $1 million to be a minimum acceptable limit. You’ll find that the additional cost of going from $300,000 or $500,00 to $1 ,000,000 is not great.
Medical expense insurance: goodwill protection. Liability insurance responds to certain lawsuits, and pays if negligence is proven. “Medical expense” insurance is a goodwill-oriented coverage designed to cover expenses of less serious injuries without regard to negligence or fault. It’s usually offered in conjunction with the liability section of a multi-peril policy.
Typical limits for medical expense insurance range from $1,000 to $10,000 for each injured person. Levels of $3,000 to $5,000 are most common.
Medical expense insurance may be purchased so that it takes the place of an injured person’s medical insurance, or acts as a supplement to it. The first is called “primary,” and the latter, “excess.”
Make sure that your policy pays for injuries that occur both at and away from your church, and for those that are sports related. All church members, guests and volunteers should be covered.
IMPORTANT ADDITIONAL POLICIES TO CONSIDER.
In all but a few states, churches, like any business, are required to carry workers’ compensation insurance for their employees. Even where insurance is not required, the benefits must still be paid, and these can be extremely expensive. Failure to pay the benefits can lead to fines and other legal action.
Don’t overlook your clergy. The federal government may classify some clergy as “self-employed” for fax purposes, but most state industrial commissions consider them to be employees, and subject to the laws and benefits of the Workers’ Compensation Act.
Workers’ compensation benefits are prescribed by state law (not by your insurance company) and vary from state to state. They typically include compensation for lost wages, medical expenses, rehabilitation costs for severe disabilities, and survivor benefits for family members.
Most health, accident, pension and other insurance programs contain exclusions regarding work-related illnesses and accidents. If this is the case with your insurance program, then a workers’ compensation insurance policy is your only source of benefits.
In six states (Nevada, North Dakota, Ohio, Washington, West Virginia and Wyoming), this insurance may be purchased only through a state fund. In all other states, it is available through private insurance companies.
Buses and cars.
If your church owns or leases one car or a fleet of buses, it is imperative that you carry adequate automobile insurance.
Liability protection. Automobile liability insurance drivers against bodily injury and property damage lawsuits arising out of at-fault accidents involving your vehicles.
Limits of $1 million are readily available and should be purchased. An automobile can cause tremendous damage to property and people-far more damage than contemplated by many churches with low limits of insurance. Saving a few dollars on low limits can prove very costly to your church if your vehicle is involved in an accident.
Uninsured motorists. Uninsured motorist coverage protects you for accidents caused by drivers who have no insurance or who carry inadequate insurance to pay for your injuries and damages. This coverage is important, since many drivers (even in states with compulsory insurance laws) carry no insurance or minimal limits.
Medical payments. “Medical payments” insurance pays for minor medical expenses of those injured in your vehicle, and for pedestrians struck by your vehicle, without the need for them to sue your church. Limits for this protection are typically $3,000 to $25,000 per person, and $25,000 to $50,000 per accident.
In some states, “no-fault” or “personal injury protection” coverages take the place of medical payments insurance.
Damage to your vehicle. Your liability insurance is not designed to reimburse you for damage to your vehicle. For this protection, turn to collision and comprehensive coverages.
Collision: This coverage pays for damage to your vehicle that results from overturn or collision with another object (such as a car or tree).
Comprehensive: This covers your vehicle for most damages other than collision and overturn, such as fire, theft, glass breakage and vandalism.
No specific limits of insurance are set for collision and comprehensive coverages. The actual cash value of your vehicle, minus any deductible, determines the maximum amount you will be paid. Minor and moderate damage will probably be repaired. Extensive or total damage usually results in a cash settlement, but your insurance company has the option of providing you a vehicle similar in type, age and condition to your damaged vehicle.
There may come a time when the value of a vehicle, coupled with a deductible, is so low that collision coverage isn’t worth the premium. You may or may not feel the same regarding comprehensive coverage. But there is never a time when you should be without liability insurance. Even the “old beater” can cause tremendous bodily injury and property damage.
Steam and hot water boilers.
Explosion of a steam boiler is rarely covered by a multi-peril policy. If your church has a steam boiler, it should be insured by a special boiler and machinery policy. This policy covers damage to the boiler and other property which is caused by explosion.
Hot water boilers may also need special coverage. Most multi-peril policies exclude damage to boilers caused by “dry fire”–burnout of the boiler from the inside.
When you purchase boiler insurance, the insurance company will arrange for periodic inspections to help prevent an explosion and costly breakdowns. This saves you the expense of an inspector–an expense that may be required in order to comply with laws in your state.
Computers and software.
You probably have some coverage for your computer hardware and software under your multi-peril policy. But multi-peril protection usually falls short for these highly sensitive items.
Unlike most property, computer hardware and software are easily damaged by variations in humidity, temperature and electricity. And, your programs can be accidentally erased or damaged.
If a computer is vital to the operation of your church, consider purchasing a data processing policy. They’re not all alike, so make sure yours covers:
* Your data, programs and media;
* Equipment you own, lease, rent or are otherwise legally responsible for–including temporary coverage for additional equipment you purchase or acquire after your policy is put in force;
* The types of damage peculiar to computer hard-ware and software–such as accidental erasure, changes in temperature, humidity and electrical current, and mechanical breakdown;
* Damage that occurs at or away from your church;
* Extra expenses you incur for operating without your computer, after it is damaged and out of service.
Umbrella liability protection.
An umbrella liability policy provides higher limits of insurance for your general liability, automobile and counseling liability exposures.
$1 million is the standard umbrella limit, and higher limits-in multiples of $1 million-are available from most insurance companies.
If you own or use a bus or van, an umbrella policy is an important component of your insurance program. The potential for serious injury to several passengers makes your automobile and multi-peril policy limits inadequate.
Even without the use or ownership of a van or bus, an umbrella policy is a smart precaution in today’s world of seven-figure court judgements.
LOOK BEYOND COST IN MAKING YOUR DECISIONS.
When operational funds are limited, as they are for most churches, it is tempting to focus more on what you pay (premiums) than on what you get (services and coverages).
Insurance is not a generic product. Companies vary a great deal in financial stability, church insurance expertise, service and claims philosophies, coverages and price. Base your decision on all of these factors and you will have handled your insurance buying responsibility admirably.
TAKE AN INVENTORY OF YOUR PROPERTY
A thorough inventory, including the value of items and photographs, is important for any church.
Inventories help you and your insurance agent establish adequate insurance limits. After a loss, an inventory makes it much easier to settle your claim.
The best way to record property values is at the cost to replace it. For most items, you don’t need a professional appraiser. Church volunteers can record your property items and contact suppliers or check catalogs and stores for current cost information.
Photographs or videotapes are highly recommended, especially for property that is rare, highly valuable, or can’t be adequately described by words.
Store your inventory at a bank or other location away from your church. You may provide a copy to your insurance agent.
PROVIDE CONTINUITY TO YOUR INSURANCE PROGRAM.
Turnover of insurance committees, church board members or individuals responsible for handling your insurance matters is natural. It’s natural for any organization that relies on volunteers for administrative guidance. But it can create problems if simple measures aren’t taken to maintain continuity in your insurance program.
If a committee handles your insurance, stagger the terms for members so that complete turnover cannot occur in less than three years (the length of some insurance contracts). If one individual is responsible, have him or her describe the duties and current programs to the successor before leaving the position.
Keep your pastor informed about your insurance programs, if he or she isn’t actively involved in the decision-making process. Often, it is the pastor who works most closely with the insurance company during settlement of claims.
Maintain a file of your insurance policies and correspondence-in a safe place away from your church. At least two people should know where the file is kept and have access to it. This will help prevent delays in reporting claims and determining what coverage applies.
If you lose your policies, or no longer understand what coverages you have, ask your insurance agent for new copies or explanations.
(The above material is one of a series of pamphlets published by Church Mutual Insurance Company in Merrill, WI.)
Christian Information Network