By Matt Simon
Churches or houses of worship are busy places, and Sunday isn’t the only day that visitors are in and out of your church. With Bible studies, prayer groups, daycare centers, preschools and community meetings, your church has a constant flow of people coming in and out.
In fact, when you start looking at all the possible things that could go wrong, from people being injured to property that could be damaged, it can be downright scary!
But don’t stress too much…when you work with the right insurance advisor, you can alleviate many of these worries. However, be careful. Not all advisors are created equal.
Just like no two churches are the same, no two insurance advisors are going to provide you with the same combination of critical coverage, professional advice, superior claims handling and competitive pricing.
So, how do you determine what insurance plan is right for you and make sure it covers all your risks and unique needs? Maybe you’re considering buying an “off-the-shelf” policy because it seems like it has all the coverage you need, it’s cheap, and, most of all, it’s easy.
A one-size fits all insurance plan could end up costing thousands, or even millions of dollars, at a time when you need your insurance protection the most.
Even with careful planning and the best intentions, many churches make the mistake of choosing a “one size fits all” insurance plan because they assume it’s a great way to save money.
The fact is, every church is unique, and its insurance coverage should reflect your uniqueness. That’s why it’s important to work with your insurance advisor to determine your risks of loss, what types of coverages fit your specific needs, and what’s within your budget.
What are your business risks?
Churches face a variety of risks due to the constant activities that are going on at the church or are hosted by the church. In addition, churches often have significant assets that need to be protected. Some of these risks include:
* Fires
* Slips & falls
* Theft
* Vandalism
* Weather events, like snow, ice, wind or hail
* Allegations of sexual abuse or misconduct
And this list only scratches the surface. Most churches face additional risks or threats to their business that need to be thoroughly considered and addressed before a loss ever occurs.
What types of insurance do you need?
Commercial Property Insurance
When fire, theft, wind, hail, lightning or other disasters strike your church, you need to be prepared for what you can control (essentially, how can you respond to help mitigate further damage), and have a plan in place to recover financially from those risks that you can’t control.
A Commercial Property Insurance policy will cover the church, as well as the contents of your church, including light fixtures, office equipment, furniture, computers and more.
For example, a circuit breaker malfunctions and starts an electrical fire. The fire spreads through the entire church, burning your contents and the building. A Commercial Property policy would cover the damages to the building, as well as the replacement cost of the damaged contents.
Commercial General Liability Insurance
A typical CGL policy provides coverage for claims of bodily injury or other physical injury, personal injury (libel or slander), advertising injury and property damage as a result of your products, premises or operations.
For example, one of your members is on her way out of the church following the services. As she approaches the steps, she trips and falls down several steps breaking her leg and needs to be taken to the hospital for treatment. Could you be responsible for her injuries? What about the legal costs you’ll incur if a lawsuit is filed?
Without the right CGL policy, you could be facing all of these costs on your own. However, if you had the correct coverage in place at the time this accident occurred, your insurance company would step in and handle this claim on your behalf.
As a safeguard against liability, CGL enables you to continue your normal operations while dealing with real or fraudulent claims of negligence or wrongdoing. CGL policies also provide coverage for the cost to defend and settle claims.
Directors & Officers Coverage
This coverage might seem to be similar to General Liability coverage, but it’s completely different.
As a director or officer of your church, you could be held personally liable for financial damages that result from your actions, or inactions. For example, if you:
* Fail to maintain adequate financial records
* Exceed the authority granted by your charter or bylaws
* Use budgeted money in a manner different from originally intended
And keep in mind, you don’t actually have to be guilty of any of this, the allegations alone are enough to cause significant headaches, and legal bills.
When you add Directors & Officers Liability Coverage to your church policy, you not only have coverage if any of these situations occur, but you would have coverage for the legal bills and defense costs associated with defending your directors, officers, and your church if such allegations are made.
Additional insurance coverage options all churches should consider
Business Income Insurance (also known as Business Interruption Insurance) is an option that you may want to consider, as it’s designed to cover the loss of income you would suffer after a disaster.
Business income coverage protects against the loss of income a church suffers when a covered loss causes damage to the insured premises. The loss doesn’t have to cause the church to shutdown entirely. Even a covered loss that causes the church to slow down can be covered with business income coverage.
Equipment Breakdown Insurance is another important policy for churches, especially given all the equipment (heating, AC, computer equipment, etc.) you’re relying on almost on a daily basis so that you can remain open. And without functioning equipment, you’re probably losing income.
Privacy Liability & Data Breach Insurance has gone from a little-known option in the insurance world to an absolute must-have given the number of data breaches and the costs associated with even a small breach.
Consider the amount of personal information you collect, store and use at your church – think credit card donations or personal information on your members. This information could be in digital format, hard-copy, or both. Now imagine opening your doors to many of the most unscrupulous individuals for the next six months and allowing them to access and use any information they want.
Sounds crazy, right? But this is exactly what’s happening in our digital world. Breaches occur to the largest, and smallest businesses. No one is immune.
A data breach often goes unnoticed for months, and by the time it’s discovered, the personal information stolen has already been used to wreak havoc on the victim’s identity and finances.
It’s really not a matter if your church will suffer a breach, only a matter of when. Without Privacy Liability & Data Breach Insurance, you’re on your own to navigate the increasing number of local, state and federal regulations you must comply with, in addition to the legal costs and damages you’ll suffer.
This is only the beginning to the insurance coverages that churches need to consider. However, if you have these policies in place, you can form a solid foundation of protection for your church.
When you have confidence in your church insurance, you have greater peace of mind knowing that you can keep working to generate revenue, even when disaster strikes.
Matt Simon is vice president of Hill & Hamilton Insurance and Financial Services, www.hillandhamilton.com.
