Choosing business insurance for a church involves much the same analysis as choosing insurance for a business; however, churches differ in some respects from the traditional business:
- Churches are typically governed by lay volunteers or ecclesiastical boards.
- Churches make use of volunteers more than employees.
- Churches can inherit icons, valuables, land, buildings and other valuable property that is expensive to replace or to assign a value.
- Churches often sponsor non-profits and allow their facilities to be used by non-profits.
- Churches can be held to cannon law or certain doctrines and face liability if the church does not adhere.
These differences make decisions regarding business insurance for the church somewhat different than the ordinary business.
You will want to review our checklist of documents and assemble all documents relevant to your church. Make sure to include leases for all locations where any church activity takes place: halls, meeting rooms, parsonages, temple, church, anywhere the congregation meets. Make sure to include a current list of volunteers. Make sure to have the bylaws or church constitution available.
Once the documents are assembled the church should contact its governing body. Often the governing body, if large enough, has already chosen an insurer or may be self-insured for certain liabilities. More importantly, the governing body has probably established rules and information for churches and that information can be invaluable.
In the United States, there is a growing evangelical movement and a shift to smaller independent churches across the country and across all denominations. The result is often that church leaders are not attached to a larger governing body and do not have access to the experience and possible discounted premiums available to larger organizations. So, contact with a larger governing body may not be an option. This makes the role of a good agent or broker all the more important.
Unless your congregation is a large congregation with a large budget and substantial property interests, using a skilled local agent (preferably, in the congregation) is a good choice for a church. The agent must be familiar with commercial insurance and have the endorsement of other businesses in the community. While the congregation may have a well-meaning personal, auto or life agent in the congregation, it would be better to choose an established commercial agent.
The church and its agent should try and place insurance with an established "church insurer." Certain companies have worked with churches for decades. For example, Church Mutual Insurance, has been insuring churches since 1897 and now insures over 90,000 ministries. That is not a particular endorsement, but rather illustrative of the kinds of experienced insurers that exist out there. Your church should stick with experienced insurers.
Property Insurance
Your church will need property insurance. Property insurance insures against loss or damage to property used by the church. If, for example, a fire occurs and the church is damaged the property policy to provides that coverage.
The church will need to make a decision regarding whether they will buy actual cash value coverage or replacement cost coverage. For more modern facilities this is similar to insuring a business.
But, for older churches, this can be a very difficult decision. Churches that have older, historical buildings will find it prohibitively expensive to insure for full replacement value and may need to opt for a lower level of coverage. But, if at all possible, your church should seek full replacement value with a rider or endorsement to cover any additional expenses caused by having to bring your church up to local building code standards. Because, if a church that is decades old is damaged, when it is repaired, it will need to comply with modern standards. This can mean thousands and thousands of uncovered extra costs.
When purchasing property insurance, make sure that all church property is covered. Does your church provide living quarters for the minister? That property needs to be covered by the church if it remains the property of the church and your clergy can purchase specialized clergy homeowners or tenants coverage. Does the church have valuable artifacts and irreplaceable items? These need to be inventoried and listed on a separate schedule and you must ask if the items are covered for their full replacement value. Additional coverage or an endorsement may be necessary.
Liability Insurance
Liability insurance protects the church when it is liable for damages caused to another or another's property. This type of business insurance is necessary for the church. There is a tendency by congregations to think that parishioners will not sue. In my experience, parents faced with caring for an injured child will sue and the church needs liability insurance.
You want liability insurance for volunteers. Volunteer insurance can be a complicated area and you will want the assistance of your agent and a local attorney familiar with the laws of your state to determine appropriate coverage. Your insurer will often have established rules to follow for volunteers and these rules may be costly to follow (background checks, applications, waivers) and some insurers offer free or discounted services to comply with these rules - ask your agent.
Professional Liability or Acts, and Errors & Omissions Coverage
Your clergy will need the same professional liability insurance as lay professionals especially if they hold advanced psychology or similar degrees. Many clergy do not secure professional liability insurance, but their professional services are as equal to an attack in a litigious society as any other. The congregational leadership and those that handle church funds should consider errors & omissions insurance.
Business Auto
If the church will use a motor vehicle to make deliveries, visit the congregation, or for transport your church will need a business auto policy. Make absolutely clear to your agent what the vehicle will do. Often an additional endorsement is needed and extra coverage for transportation.
