As a pastor or administrator, you not only have a responsibility to guide your congregation, but also to create a stable financial foundation for your ministry to survive. Having an effective insurance program will aid you in that important endeavor and serve a valuable purpose because It’s Not About Insurance, It’s About Protecting Your Ministry.
Most of the time, your ministry’s specific needs will dictate which policies to obtain that will best serve and protect your church and the people who worship there. Since those needs almost always transcend commonly understood property and basic liability coverages, we encourage you to work with an insurance professional who specializes in the nonprofit sector and can guide you.
Often, it’s as much about what is excluded as what needs to be included. Many churches assume “extra coverages” are included, when in fact they are a specific endorsement or separate policy. With that in mind, let’s examine some key coverages or areas of protection that many congregations overlook that serve a valuable purpose in your church or organization.
Umbrella Liability: Choosing the Right Amount of Coverage
Use your annual budget as a reference point to determine your preferred amount of umbrella liability coverage, or if you need it at all. An umbrella liability policy (plus your base limits of coverage) should be an amount adequate to cover your annual budget until the annual budget exceeds $10 million.
Statistically, the odds of a non-property claim to exceed $3 million is very small, and it is almost unheard of to have a $10 million claim, so if your budget exceeds $10 million, look at the activities that could create the largest liability and then make an evaluation of higher coverage.
Sexual Offenses
While it is an unpleasant topic, sexual misconduct claims have remained the #1 reason churches go to court for 9 of the last 10 years. Since I still visit many churches whose idea of a preventive program consists of only background checks, please allow me to note some standard practices that every organization should implement at a minimum. There are additional steps to further enhance your program which we would be happy to share with you, but the following should be active in your church, regardless of size.
- Use a Written Application – Every person working with children or youth (volunteer or paid) should complete a proper screening application.
- Interview – Interviews do not have to be intense, but they should inquire into an individual’s background sufficiently to make a determination of their suitability for working with minors.
- Two Adult Rule or Never Alone Rule – Perhaps the most effective tool for reducing the risk of sexual molestation of minors is adopting and enforcing the mandate that no adult is ever alone with a minor, period.
- Waiting Period – Any volunteer desiring to work with minors should have a waiting period such as six months after joining or regularly attending a church before being allowed to do so.
- Background Checks – At the very minimum, make sure you are conducting nationwide background checks. You can get more detailed by combining a national check with a state and/or county check, but a nationwide check should serve as your minimum requirement. If you are not sure what you are currently doing, find out! National background checks are inexpensive and a must—they just cannot be the only thing you are doing. Statistically speaking, the likelihood of getting a hit on a background check is less than 10%, so using that alone would classify your screening program as ineffective.
- Adequate Limits of Coverage – Sexual misconduct/molestation coverage must be endorsed on your policy and is not covered under your general liability coverage, so work with your insurance advisor on the proper amount of coverage for your organization. We generally recommend limits of at least $500,000 although $1,000,000 (or more) is ideal. There could be exceptions for less, but to play it safe, carry at least the $500,000 limits. As a side note, unless your organization is doing most of the steps previously noted, you may not qualify for the higher limits of coverage, which is just another reason to implement them.
Cyber Insurance: 5 Reasons to Get Cyber Insurance
- Mitigate financial loss from a cyber incident. Cyber insurance covers many of the expenses triggered by a breach, such as forensics, legal costs, and notifications.
- Data breaches are not the only type of cyber danger that can threaten an organization. Ransomware is on the rise. In 2021, the average ransomware payment increased by 43%, business interruption due to ransomware attacks increased by 10%, and almost 80% of these attacks included a threat to leak the hijacked data.
- Recover quickly from a cyber incident. Cyber insurance provides expert services to help minimize disruption to your organization.
- Cyber liability is typically excluded in your main policy, or the coverages provided may be nominal and are often inadequate in the event of an actual cyber event.
- It’s easy and simple to quote cyber insurance. You can get quoted in minutes and typically be protected in just a few days. Due to the risk of cyber attacks, if your organization has the ability to remove into your desktop or server, you may be required to have multi-factor authentication but we are happy to discuss that with you.
Quick Highlight of Other Coverages
- Employment Practices Liability – If your church has employees, you should consider this coverage to protect you against wrongful termination or discrimination claims.
- Employee Dishonesty Liability – Even more essential than this coverage and its limits is your checks and balances on those who handle money. If the same person controls all monies (regardless of how trustworthy you think they are), you could join the increasing number of churches dealing with an embezzlement issue, sometimes in the tens to even hundreds of thousands of dollars.
- Workers Compensation – If you have employees, you should have this coverage. While not mandatory in Texas, you lose any and all defenses should an employee be injured or get sick while on the clock. The State will advise you on how much and for how long the employee will receive compensation. Sometimes that can be extended for quite a while and in rare cases, even for a lifetime.
We understand that insurance is not glamorous and is typically a large line item in your budget. When the focus moves away from simply being an insurance policy to being a tool that actively protects the very existence of your church in doing ministry, it takes on a very specific purpose. If our agency can assist you in any way in achieving that goal, please do not hesitate to contact us.
