Most churches will face property loss at some point, requiring the filing of an insurance claim. Some will even face the threat of a lawsuit. According to Lee Wright of the Alabama Baptist State Board of Missions (SBOM), many churches are unprepared for these possibilities.
“I’d say 90 percent of our churches are underinsured in one way or another,” Wright said.
Wright, coordinator of Church Compensation Services for SBOM, directed “Church Insurance: Protecting People and Property” conferences in May in Montgomery and Cullman. He was assisted by GuideStone senior account manager John Murphy, of Birmingham.
Wright reminded participants at the Cullman-area conference May 19 about the tornadoes that ripped through Alabama four years ago.
Disaster recovery plan
“These natural disasters caught many churches unprepared,” he said. “Not only do churches need to take a serious look at their insurance coverage, but they also need a disaster recovery plan.”
Murphy recommended that churches discuss the possibility of disasters resulting in property loss, and some possible ways the congregation might deal with these.
“For example, the most important thing you do is on Sunday morning,” he said. “What would you do on Sunday if your sanctuary was destroyed on Tuesday? And who would be the ‘point person’ to answer questions and lead the church forward? A little forethought can make a big difference if the unthinkable happens.”
Wright also shared data about lawsuits involving churches from Richard Hammar, attorney, certified public accountant and author specializing in legal and tax issues for churches and clergy. The top five issues bringing churches to court include sexual abuse of a minor, property disputes, zoning issues, personal injuries and the taxation of church property.
The most important thing churches should have is protection against sexual abuse incidents, Wright said.
“Background screenings for all members who work with children is a must,” he said. “There’s no cost reason not to do this since it’s a minimal expense. LifeWay offers background screening, as do other organizations. And you should have proper supervision with two adult workers unrelated to each other present with children or youth.”
Wright said a six-month rule is another good risk management tool.
“Child predators want quick access to children, so we recommend that churches require a six month membership rule before assigning responsibility,” he said. “It’s sad that the way some churches deal with abuse is ‘out of sight, out of mind’ rather than reporting incidents to law enforcement. A church might have a predator who presents himself for membership and be unaware of his past.”
Wright said another good policy is to have clear guidelines about the use of church facilities by groups. SBOM has a suggested use policy that can be adapted by churches. To view the policy, visit alsbom.org and click “Resources.”
Murphy said churches can protect themselves, their ministries and their members in several ways against property loss through proper insurance coverage.
One way churches can protect themselves is to avoid risk.
“Especially with our young people, we want to avoid any activity that might be dangerous — maybe skydiving,” he said with a laugh. “A great way to reduce liability is to avoid sponsoring activities with high risk.”
Another safeguard is that churches avoid the misuse of church computers by having clear guidelines about access to church equipment and Internet service, and having a “no expectation of privacy” clause in their church use manuals, he said.
Murphy said churches might also transfer risk, such as hiring transportation for trips rather than maintaining church vehicles.
“The largest claims we have in Alabama are transportation related” Murphy said. “This includes accidents involving church vans and personal injury.”
One church he’s familiar with actually hired a company to do valet parking for senior adults members. One of the reasons this wasn’t done “in house” was to lessen the church’s liability.
Churches might determine to assume risk for small losses, through self-insuring or establishing high deductibles, and thus reduce premium costs. But also it’s imperative to insure adequately against the possibilities of loss in ongoing ministries, Murphy said.
“Church property insurance should be reviewed at least every three years,” he said.
Workers’ compensation
Murphy further urged participants to be sure their churches had workers’ compensation insurance.
“If a church has five employees or more, workers’ comp is required,” he said. “This is good insurance and includes a death benefit, medical payments and some loss of income payments, so it’s a good idea to have it.”
Murphy said GuideStone offers “as needed” policies for contractors hired to do work in churches. Another option is to ask contractors to sign a waiver of liability form or to have them reimburse the church for the cost of insurance.
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