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Is There a Crack in Your Insurance Coverage? Five Areas of Risk That Could Affect Your Organization

It’s not about insurance – it’s about protecting your ministry. It’s a mantra we try to abide by in our agency when we’re visiting with the many different churches and other ministry minded organizations we’ve dealt with over the years.

There are many facets to a well structured insurance plan that serve as the foundation for this challenge of protecting your ministry…but in this post, let’s focus on five important areas that can impact your ministry.

1) Cyber Liability: 

Organizations that use digital tools face new methods for operating and now, new risks. The potential liabilities associated with technology and cyber crime is ever increasing. If you find yourself with a data breach, you can incur costs which can add up to thousands of dollars depending on the size of your organization. There is also a growing need for Cyber Liability coverage, even among smaller organizations, since limited funds and too few technical experts often results in a weaker computer security and thus, a potential easy target for hackers. There are several things you can do to help reduce your risks of a cyber attack, but you may also want to consider a cyber liability policy. Typical features of such a policy may include:

  • Network Security and Privacy Liability: This protects your liability if your computer system transmits a virus, or if personally identifiable information or health information held by  your organization is breached.
  • Electronic Media Liability: Copyright and trademark infringement, plagiarism, defamation, violation of a person’s right of privacy on your organization’s website and more.
  • Funds Transfer Fraud Liability: Covers situations where your organization’s computer system is accessed by an unknown outside individual who is able to retrieve bank account information of others (church members, students, etc.) and electronically transfer funds out of those accounts.
  • Privacy Breach Expenses: If someone steals information and by break notification laws you were required to notify those affected, this would cover those fees, costs and expenses.

There are a lot of ways you may be vulnerable – these are just a few:

  • You record or store credit card, tax identification information and birth dates of contributors, staff or volunteers.
  • Maintain driver’s license, insurance, or Social Security information.
  • Obtain medical information or histories on any member of mission trips or youth activities.
  • Maintain a blog, a social network page such as Facebook/Instagram, an online bookstore or webcasts of services.
  • Load pictures of congregation or staff members on the organization’s website.

2) Employment Practices Liability: 

It wasn’t that long ago that this coverage was the new kid on the block, but while it’s gained a lot of momentum and many have done the right thing in obtaining this protection, there are still many organizations that have not. The purpose of the coverage is simple – it provides protection for claims arising from practices associated with employment-related events. This includes claims of discrimination, wrongful termination, etc.  The premium cost for this item is usually less than a few hours of attorney fees.

3) Workers Compensation: 

In Texas, Workers Compensation coverage is mandatory! Before you question if we need to go back to insurance 101 to review this statement, it is indeed a true statement. The only question is whether you are going to self-insure for Workers Compensation or if you are going to provide that coverage through a workers compensation insurance policy.

Texas is indeed the only State that does not make the purchase of Workers Compensation insurance mandatory for an employer. But by law, the employer is still liable for lost wages and medical benefits if an employee is injured or incurs a sickness due to a job-related accident.  We have seen claims in the hundreds of thousands of dollars and many more in the tens of thousands, so we strongly advise that whether you have one employee or many more than that, you consider protecting the church and your peace of mind by purchasing Workers Compensation insurance. Please note one very important item that is most often misunderstood –  most health insurance policies contain an exclusion related to work-related injuries or sickness. Under Limitations and Exclusions in your health insurance policy, it likely reads something like this “…any services or supplies for which benefits are, or upon proper claim would be, provided under Workers Compensation Law.”

4) Foreign Liability and Foreign Travel Insurance:

Summer time is already here and many churches will be going on mission trips, many of those overseas. Rarely does an insurance policy provide liability protection or medical payment for overseas ministry, so your church or ministry could be at great risk. The coverage provided through your sponsoring organization or travel agency is highly likely medical only but does not provide any protection if you were sued in a foreign country.  We highly recommend that you contact your insurance agent for more information on this invaluable protection which can be purchased on a per trip basis, or perhaps under one policy if you have multiple overseas trips planned.

5) Outside Users of Your Facilities:

We’ve seen this a lot lately, perhaps because churches need to find additional revenue sources.  Regardless, a number of churches are leasing their buildings to other congregations or allowing multiple others to use their facilities. In these instances, to best protect your organization, we recommend the following:

  1. Require the outside group to list your organization as a named insured in its liability policy, with acceptable coverage limits.
  2. Require the outside group to indemnify and ” hold the church harmless” in the event of an injury; and
  3. Disclaim any duty on the part of the church to supervise the premises during the group’s occupancy.

Your members, guests, volunteers, facilities, and the church’s assets comprise the essentials of your ministry and you need to make sure your church has adequately protected them. Though not a substitute for good risk management, insurance is a valuable tool. Develop a relationship with an insurance agent who understand the unique needs of churches so you can best discuss your needs and situations. By doing that, you will help keep your ministry protected and standing on a firm foundation.