As published in Worship Facilities, May/Jun 2011
Getting the right kind of insurance for your church is largely a matter of doing business with a company that specializes in dealing with issues associated with worship facilities. And once you find the company and the policy you want, there are several steps you can take to lower the cost of the coverage you need.
Churches have unique insurance needs that require the services of a specialist, according to Eric Spacek, senior church risk manager for West Des Moines, Iowa-based GuideOne Insurance.
On the property side, church buildings are often uniquely constructed facilities with hardto- replace ornamentation, such as stainedglass windows, explains Spacek. And inside, they tend to contain specialized furnishings, such as pews, pulpits, organs, and (increasingly) audio-visual equipment—all of which insurers unfamiliar with churches can have difficulties in valuing and underwriting.
On the liability side, today’s churches are more and more involved in activities that present risks, such as childcare and counseling, according to Spacek. Unlike those for run-of-the-mill businesses, church insurance policies also have to take into account the extensive use of volunteers, as opposed to just employees. And at the same time, coverage against losses for sexual misconduct and employment practices— growing areas for litigation nationally— are not usually found in most general liability insurance policies, with churches typically having to add them on.
Get it right
Cost-conscious churches sometimes error on the side of frugality when it comes to buying insurance.
“The biggest mistake churches make is to just try to find the lowest-cost policy they can, without looking closely at the coverages they need,” notes Spacek.
Churches need to take the time to plan for what they truly require when it comes to coverage, according to Patrick M. Moreland, vice president-marketing of Merrill, Wis.-based Church Mutual Insurance Co.
In addition to making sure their buildings are not underinsured, churches need to guard against a variety of other losses.
“Make sure you are insured against loss for items that are unique to your church,” Moreland says. Examples include “extra expenses of operation” and “loss of income” coverages for churches that operate schools, daycare centers, and other tuition/fee-funded activities. Depending on where they are located, flood and earthquake insurance might also be appropriate, he notes, and are often required as a condition of a mortgage.
Churches can save money on premiums by increasing their deductibles, based upon what kind of losses they feel they can handle themselves.
“It’s a balancing act on the part of a church,” says Moreland. “It can take a small savings up front with a high deductible, and risk absorbing a greater share of a loss, or maintain a more reasonable deductible, and not have to worry about the amount absorbed.” Another way to save insurance premium dollars is to insure a building at its actual cash value (i.e., taking into account a depreciated amount) rather than replacement value, he notes.
Churches can lessen their exposure to risk, and possibly help reduce their insurance costs, by identifying and doing what they can to reduce the risk of loss from crime.
Standard security measures—such as enhanced lighting, care in landscaping to avoid creating hiding places, reinforced glass, alarm systems, and cameras—are effective tools in helping churches guard against losses from crimes such as burglary, theft, arson and vandalism, according to Jeffrey Hawkins, executive director of Christian Security Network, a Manassas, Va.-based organization that assists churches, schools, ministries and missionaries in dealing with risk.
“These standard measures, properly implemented, will help, but there is no level of security that is going to be 100% effective,” says Hawkins. “But at the same time, no security at all translates into 100% vulnerability—in other words, by doing nothing a church greatly increases its exposure to risk.”
Meanwhile, internal losses from financial fraud are a growing problem for faith-based organizations, according to Hawkins. And for these and any other type of entity, “Internal crimes are the hardest to detect—probably only about 30% of all of them are ever discovered or admitted.”
Once committed, it is not unusual for financial fraud to remain undiscovered for years, until someone goes through the books and finds irregularities, Hawkins says, adding that sound accounting practices, oversight of individuals handling funds, and regular audits by outside CPA firms are the best ways for a church to address the risks of this type of crime.
Sidebar: Ten Risk-Reducing Steps for Church Leaders
From the insurance standpoint, there are 10 major things a worship facility leader can do to reduce risks, improve safety, and enhance security, according to "10 Steps to a Safer Church," a publication from West Des Moines, Iowa-based GuideOne Insurance. These include:
1. Form a safety and security team - Recruit volunteers to identify risks at your church and formulate a sound risk management program.
2. Regularly inspect your buildings and grounds - This includes regular walk-throughs by your safety and security team, as well as a minimum twice-yearly (spring and fall) comprehensive facility inspection by qualified electrical, HVAC, fire prevention and/or plumbing contractors.
3. Remove snow and ice promptly - Snow and ice can cause slip-and-fall injuries, "the second most common reason for church insurance claims," according to GuideOne.
4. Guard against water damage - Frozen pipes that break, leaky roofs, and blockages in drains and sewer lines are major causes of water damage.
5. Have your electrical system inspected - Help reduce fire risks by having a licensed contractor inspect your church's electrical system regularly.
6. Follow the "5 Ls" of crime prevention - Use appropriate locks for windows, doors, and other entry/exit points; make use of 24/7 interior lighting, sunset-till-sunrise outdoor lighting, and motion-activated lighting; landscape with an eye on not creating hiding spots for criminal activity; establish a network of lookouts through church- and neighborhood-watch programs; and develop positive relationships with law enforcement.
7. Use surge protectors - Minimize the risks of power surges by utilizing proper electrical grounding and surge protection devices.
8. Plan and properly supervise recreational activities - Injuries can result in liability lawsuits.
9. Screen workers and volunteers who work with children - Screening can deter sexual predators and allow you to eliminate inappropriate candidates.
10. Hire competent and insured contractors - When interviewing potential contractors, check their references and make sure they carry liability, workers' compensation and excess (umbrella) insurance with limits equal to or greater than your current policy.
Source: GuideOne Insurance