Church Insurance | Religious Organization and Institutional Insurance.

Written by Jon Lipton

Thursday, July 17, 2008

Church Insurance, Religious Organization, Pastoral Liability and Institutional Insurance

Many Churches are Improperly Insured

In 2006 the Asbury Park Press ran an article stating that approximately 60% of US dwellings are under insured, the average dwelling is undervalued by 22 percent. This report came out way before the surge in oil, gas & commodity prices. In the last year alone brick, concrete, plumbing, steel & aluminum and other building materials have increased 3.4%. Any material that is transportation-intensive or petroleum based has become even more expensive. In addition to the property insurance concerns, there are liability insurance issues that need to be addressed as well.

Insurance & Cost to Rebuild Churches

What adds to rebuilding costs is the fact that many churches, temples & mosques are very old and many have been added to their local historic register. In the event of a loss, these buildings need to be rebuilt in accordance with the historic committee. Another thing to consider is that most likely over the year's local ordinance & laws have changed. So to rebuild a building you need to adhere to these local ordinance & laws. One such ordinance would be the use of BX wiring instead or Romex wiring. BX wiring is encased in metal, where Romex is only wiring covered with a plastic coating or making your building handicap accessible or using wood framed windows instead of metal. How about the replacement of expensive stained glass windows, sound equipment or a very expensive church organ?

Church Liability Insurance Concerns have Changed

In light of the aforementioned, Its time to dust off those churches, temples & mosques' insurance policies, not only because of the aforementioned but to make sure that important general liability exposures have been addressed. Some of these include but are not limited to sexual abuse & molestation, professional liability & pastoral liability.

Church Liability Insurance Issues

I think you got the point on under-insured property values. Let's move on to more important coverage like the General Liability Insurance exposures of a religious institution. Unlike property values which typical have a known value, general liability insurance claims have unknown values. You can't put a price tag on a liability claim. In our litigious society anyone can sue for any amount they want. Of course those values need to be substantiated but do you know how scary it is to get a lawsuit saying you are being sued for $40,000,000? I have seen lawsuits with those astronomical numbers. Although I have never seen a judgment for that amount, I have heard about judgments in the few million dollar range. Unfortunately values and emotions escalate when children are involved, so you churches/temples & mosques with day care or schools listen up. Anyone can make a claim or file a judgment, frivolous or not. We still have an obligation to respond to those claims. That entails hiring an attorney and spending a lot of money for good representation. In light of the recent churches/temples & mosques scandals, many companies have limited or all together excluded sex abuse and molestation coverage and professional liability. These coverage's are available so it is important to request an insurance quote with these coverage included. These coverage's may cost more in the short term, but can save you hundreds of thousands of dollars if there is ever an allegation of sex abuse and molestation misconduct.

Pastoral Liability Insurance - Church Professional Liability Insurance

Another important coverage for a church is Pastoral Liability Insurance. Usually a criterion to obtain pastoral liability coverage is that the clergy must be licensed or ordained or "clergy privilege" could come into question. Some of the coverage's that Pastoral liability provides coverage for are following: Counseling Malpractice, Sexual Misconduct, Child Abuse Reporting-in some instances, not reporting a known child abuse is a crime, Defamation, Invasion of Privacy, Diversion of Funds, and Misappropriation of funds.

Clergy Privilege Insurance Issues

It is important to take find out if "clergy privilege" exists in your state. "Clergy Privilege" is very similar to attorney client privileges. Where a person can find comfort that everything said in front of the clergy will not be disclosed. There are certain and extreme cases where the clergy can be legally ordered to break these privileges, but they are few and far between. One such case were a clergy might have an obligation to break "Clergy Privilege" is when there is an incident of child abuse or neglect. Please check your state and local laws to find out the clergy’s responsibility when they are aware of an incident of child abuse or neglect. Failure to report child abuse or suspected abuse could be criminal. It is also important to understand what constitutes privilege criteria in your state and to avoid exposures with regard to pastoral liability. Clergy counseling is suppose to be spiritual in nature. What is spiritual? Spiritual is a vague term. As clergy you have to walk that fine line of spiritual counseling and make sure it does not fall into a non-spiritual discussion.

Clergy Privilege and Church Insurance

Another thing to note is that Clergy Privilege is waived when another person, that is not a member of the clergy, is present in the room during counseling. This brings up another issue. When a clergy is counseling a member of the opposite sex or a child it is important to have another person in the room, make sure that other person is a member of the clergy and is licensed and/or ordained. Allegations can be made, although not necessary true, and in the event a lawsuit is filed, the Church still has an obligation to defend that claim.

Church Policies and Procedures

It is important that a church have a certain written policies and procedures in place to insulate itself from liability. There is never a fool proof formula, but some of these important documents the church should have include but are not limited to the following

One such document is a written statement of policy that any act of physical or sexual abuse is not tolerated.
You also want to make sure that you have a written procedure in place that will facilitate prompt recording, reporting and investigation of, and response to complaints of sexual misconduct or molestation.
Written guidelines for the reporting of suspected abuse or neglect of students. Have a written training program for all employees, volunteer workers and students regarding your sexual conduct and molestation policies and procedures.
Have a written employment policy that includes background and reference checks for employees & volunteers.
Make sure the church by-laws are up to date and address disciplinary procedures with regard to employees & members that play a role in the church.

In addition to the aforementioned some other important coverages include, Directors & Officers, Employment Practices Liability, Boiler & Machinery Coverage. For exposures and information on churches with day care or schools, please read our day care and school article: Day Care Insurance Abuse and Molestation Insurance .

For information on Church Insurance, Pastoral Liability Insurance as it relates to Defamation, Invasion of Privacy, Diversion of Funds, and Misappropriation of fund or other types of church. Pastor exposures or to find out more about insurance for these types of church insurance exposures, please contact Castle Rock Agency Inc about a Church Insurance Quote , at 212.360.2334.