What Your Insurance May Not Cover Is it time to recalculate your risks? by Patrick M. Moreland

Insurance is not a one-size-fits-all product. The size and construction of your facility, its contents, the activities that take place within it and beyond, and even your staff make your church's insurance needs unique. Worth considering: If a tragedy strikes your church, you'll find the claims process much smoother if you have thoroughly and periodically reviewed your insurance program.

Note: While standard fire and liability coverages are obviously needed, other important coverages sometimes are overlooked. Here are less-than-obvious insurance factors to investigate with your agent to clarify coverage you presently have or may need to add.

• Protecting Property
 * Claims settlement can be on a replacement cost or actual cash value basis. Recommended: Replacement cost, by which you may repair or replace an item with material of comparable kind and quality. Actual cash value provides the replacement cost less deterioration, depreciation, and obsolescence.
* The pastor's personal property at the church isn't always covered, and when it is covered, the limit may be too low, considering the value of books, sermons, and computers.
* Visitors' and employees' personal property receives little coverage in most policies. Note: People's homeowners insurance probably covers stolen or damaged clothing, musical instruments, and other possessions. Likewise, vehicle owners can turn to their auto insurance for autos vandalized or stolen in your parking lot.
* Mortgage payments don't stop because a fire makes your church unusable, and you may need insurance money to rent a building, organ, or other equipment.
* Costly modifications caused by revised building ordinances—such as those pertaining to fire suppression or handicap accommodations—may increase the cost to reconstruct or repair a heavily damaged building. Worse: You may be forced to demolish undamaged portions. Remedy: Factor these possibilities into your planning.
* Inadequate limits of insurance not only affect how much you receive for a total loss but also payments for partial losses. Remedy: Set your limit high (usually 80 - 90% of full value).
* Loss-of-income protection is important if your church depends on rental property or tuition fees. A similar coverage is available for loss of rental value. Example: If the parsonage is heavily damaged by fire, the coverage provides for the rental of a home while repairs are being made.
-Broken glass coverage is limited with some policies. Common limits: $250 per pane and $1,000 per building. Suggestion: If the value of your windows exceeds your policy's limitations, arrange for full glass coverage.
-Floods and earthquakes usually require special coverage.
-Back-up of sewers and drains caused by heavy rains can damage carpeting, walls, files, and furniture, and many policies exclude it.
-Maintenance problems (such as a leaky roof) and the damage they cause generally are not insurable.


• Looking at Liability
* Sexual misconduct and molestation coverage is essential today. Accusations, whether founded or not, can arise in any church.
* Lawsuits alleging errors and omissions by leaders are not protected against by general liability policies. Suggestion: Consider a separate policy or endorsement to cover your directors, officers, and trustees, making them free to make decisions in your best interest without undue fear of legal actions.
* Pastoral counseling rarely covered in standard policies. Most pastors appreciate counseling coverage and feel more comfortable handling delicate matters because of it. Plus: The coverage protects both pastor and church.
* Where coverage applies is important. Liability and medical expense coverage should apply at or away from your church.
* Medical-expense insurance covers the cost of less serious injuries that occur at church or on a church-sponsored activity. Note: This insurance may be purchased as primary coverage, which pays from dollar one but costs more, or as excess, which pays after an injured person's insurance responds.
Important: Be sure the insurance covers your members, guests, and volunteer workers, and that sports-related injuries are included.
* If you use someone else's building, you may be legally responsible for damage you cause. Suggestion: Advise your agent so that your policy can be endorsed to protect you. Related action: Seek proof of insurance from organizations that use your facility.
* When you rent or borrow a vehicle, or ask someone to drive on behalf of your church, you create a liability exposure. Suggestion: Purchase hired and non-owned liability coverage to protect your church.
Related action: Notify volunteers that their liability insurance is primary when they drive their vehicle on your behalf, and that, in most cases, damage to their vehicle is covered only by their own insurance.


• Covering Employees
Most states require churches to carry workers compensation insurance for employee injuries. And, even where participation is not required, churches may still be required to pay state-mandated benefits following an accident. Worth considering: Health insurance policies usually exclude work-related accidents and illnesses, so workers compensation insurance may be your only safe option.
Note: Your state's workers compensation bureau probably considers pastors to be employees even though the IRS may not.

Patrick M. Moreland, CPCU, is an assistant vice-president of Church Mutual Insurance Company in Merrill, Wisconsin.

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