Is Church Insurance The Best Choice For Your Community?

So let’s talk about how and why you need church insurance today.

Certainly, a church can be a place of worship, solace, and redemption. However, your hub of religious worship is exposed to risks that can be financially devastating.

Why is Church Insurance Important?

Church insurance can cover your organization for the following risks:

• People risk: Even though a church is a place of worship, it is still a nonprofit organization. Because it houses employees, staff, volunteers, and visitors under its wings at any given time, it is important to keep the premises insured.
• Fire risk: Candles are a staple in churches and other places of worship. Thus, fire is a real risk for these entities. According to BBC, in 2019, a massive fire broke out at the 850-year old Notre-Dame church in Paris. This caused significant property damage. Similarly, while the church did not have any insurance, according to Wall Street Journal, Notre-Dam was able to raise $790 million in donations for renovations.
• Privacy risk: Although most churches don’t rely heavily on technology like other organizations, they are still vulnerable to some risks. Moreover, churches that accept online donations and record information of church members on their databases are susceptible to cybercrime and data breaches.

Policies That Are Included in Church Insurance

As shown above, your church could face any of the situations mentioned above. So, you need to be well-versed in the details of your coverage.

Basically, common coverages for churches and religious organizations include:

Workers Compensation Insurance

In this case, workers compensation insurance offers health benefits and wage replacement to employees sustaining an injury or illness from a work-related accident. In exchange, the employees waive their right to sue the employer.

To clarify, most states do require churches to carry workers’ compensation insurance for their employees. For instance, some churches have decided to extend workers’ compensation insurance to include dedicated volunteers along with their employees. Futhermore, to be sure regarding your state’s workers compensation laws, check the U.S Department of Labor website for your state.

Commercial Auto Insurance

Commercial auto insurance offers to pay for when business-owned vehicles receive damages caused due to mishaps or accidents.

Churches use vehicles for outreach and day-to-day travel that may be exposed to road accidents. Moreover, auto insurance for commercial use can help cover church-owned or specific non-owned vehicles against these risks.

Commercial Property Insurance

Commercial property insurance covers any damage caused by disasters that aren’t natural disasters. Covered risks include:

• Burst pipes
• Explosions
• Fires
• Vandalism
• Theft

By and large commercial property insurance is quite important. Churches are architectural artifacts that need protection from these perils. Therefore, to emphasize, according to a U.S. News article, churches have often been victims of hate crimes. So, uninsured churches need to bear high renovation costs, which can be an enormous financial burden. In such cases, church insurance can take care of such expenses.

Commercial General Liability Insurance

Commercial general liability insurance protects against third-party damages that occur on the business’s premises or are caused by its operations or products/services.

To sum up, this policy provides liability protection from risks, accidents, and injuries that may occur on church premises to:

• Worshippers
• Church members
• Employees
• Staff
• Volunteers

If the church receives lawsuits due to these risks, the policy also covers court defense costs. Paying for legal defense for religious organizations can be costly. An NBC News report stated that in 2007, the Roman Catholic Archdiocese of Los Angeles had to pay a whopping $660 million to settle its sex clergy abuse cases—the largest payout in a sexual abuse scandal so far.

Professional Liability Insurance

Professional liability insurance (PLI) helps protect businesses from any risks that may come with negligence in providing professional advice. PLI is a combination of two insurance coverages:

E&O insurance: It provides coverage for legal liabilities that arise due to the business’ or employees’ negligence, malpractice, or errors.
D&O insurance: It provides coverage for damages that result from the failure of the leaders of the organization to perform their duties.
Parishioners look up to their leaders of religious organizations in times of need. PLI is a policy designed to cover vulnerabilities that pastors and church leaders face due to their close contact with their flock.

Employment Practice Liability Insurance

Employment practices liability insurance (EPLI) covers any job-related complications employees may face, which are not guaranteed by workers’ compensation and general liability. The policy includes coverage for:

• Wrongful termination
• Sexual harassment
• Discrimination

Religious leaders often assume that the First Amendment protects them from such situations, due to its stipulation that Congress cannot make any laws regulating religion or prohibiting citizens from participating in their religion. However, a legal commentary on FindLaw.com explains how the First Amendment does not allow a church to absolve itself of civil and criminal charges. Therefore, EPLI is a great choice to pair with your church insurance.

Commercial Cyber Liability Insurance

Commercial cyber liability insurance or data breach insurance covers damages and losses caused by data breaches such as:

• Cyberattacks
• Malware
• Hacking

Cyber vulnerabilities in the church are a huge concern since churches transfer or record information using technology. Moreover, a 2011 CBS news report describes how hackers stole more than $680,000 raised by a church in Iowa. The money had been intended to help the homeless and abused women. Similarly, some personal information saved on church computers to church websites that accept tithes, churches are susceptible to cybercrime.

Inland Marine Insurance

Inland marine insurance can come in handy when a church transports valuable artifacts to and from another church or a museum.

Here are a few additional coverages you may need:

Commercial Crime Policy

Commercial crime insurance is apt for crime-related losses caused due to employee dishonesty, forgery or alteration, theft of money, and computer fraud that aren’t covered by a commercial property policy. Unfortunately, there are church members and volunteers who commit crimes against their church. According to a February 2020 ABC News report, a volunteer overseeing St. Paul’s Baptist Church’s finances in New Jersey embezzled a total of $561,777 for over 5 years.

What Are the Exclusions?

Although your church insurance may cover most perils, not all are included in its coverage. Here are some of the exclusions:

• Earthquake
• Flood
• Intentional damages
• Damages occurred while intoxicated
• Nuclear hazard
• Ordinance of law
• Power failure

How Much Does Church Insurance Cost?

The cost of church insurance depends on a few factors, such as:

• Location
• The extent of the coverage
• Size of the church
• Church congregation
• Church services
• Payroll
• Church-owned artifacts
• Keep your place of worship safe.

Has this article been helpful to you? Leave a comment below and share your thoughts with us.

You can also talk to your local insurance agent to find your best coverage option and quote.