Disclaimer: This notebook and seminar does NOT constitute legal advice.

“Keep Your Church Out of Court” presents a summary of legal issues with a view towards real-world application. The seminar content is:

• Organized by key areas of law/litigation
• Presented as a two-hour overview of general church legal issues
• Arranged in eight sections:
  • Section 1 – Legal Summary
  • Section 2 – Reasons Churches Go to Court by Church Law & Tax
  • Section 3 – Abuse Prevention
  • Section 4 – Liability & Personal Injury Lawsuits
  • Section 5 – Insurance Coverage Disputes
  • Section 6 – Facilities, Weddings & Funerals
  • Section 7 – Constitution/Bylaws & Administration
  • Section 8 – Keeping Your Church Out of Court by Texas Baptists
    
    

Section 5 – Insurance Coverage Disputes

Insurance Issues

• Price Increases – Commercial businesses, nonprofits and churches face rising insurance costs and diminished coverage in some geographic regions and across a range of policy lines. Insurance companies that have suffered significant losses in some markets have chosen either to cease writing new policies or to exit those markets (and states) altogether. Most states require a 30-day notice for insurance policy cancellations, but this requirement offers a narrow window to find a new carrier and underwrite a new comprehensive insurance policy.
• Limited Insurance Options – While other insurance options do exist, churches have traditionally received insurance coverage from three primary companies: Church Mutual Insurance, GuideOne Insurance and Brotherhood Mutual Insurance. The benefit of these three companies is familiarity with the unique needs and requirements that exist for ministry activities in a local church. With the departure of some of these traditional carriers from some local markets churches are looking carefully at other insurance options, including commercial divisions at mainline companies like State Farm. Recognize that when a non-renewal occurs (a cancellation of an existing policy at the end of its term), a church must quickly find a new carrier, underwrite that policy and execute the agreement in a short period of time.
• Reduced Coverage – One area where insurance coverage has been reduced in many coastal areas (but expanding further inland) is wind/hail coverage. Almost all new policies and renewals feature a wind/hail exclusion effectively reducing coverage for roof damage to almost zero for these events. Inland areas may feature a 2% exclusion based on the full assessed value of church property. For example, a policy that values its buildings at $20 million would correlate to an annual wind/hail exclusion of $400,000. That means the church is responsible for roof repairs up to $400,000. Coastal areas are likely to face an even higher 5% wind/hail exclusion. This reduced coverage usually comes at higher cost and places churches and businesses in the unenviable position of almost no coverage in the event of a major weather-related roof claim.
• 2023 Insurance Issues Report* (2 pages)

Insurance Disputes

• Denied Claims – The insurance environment is already difficult in light of rising premiums, limited insurance options and reduced coverage, but the most challenging development is the rise of denied claims (either in part or in full). It is important to fully understand the policy provisions, limits, deductibles and exclusions for your church’s property insurance coverage. Recognize that an insurance policy is an agreement between the church and its carrier to provide certain levels of coverage for an annual premium. Both parties have responsibilities in this arrangement and both parties have an interest in the amicable resolution of any disputed claim. Steady negotiation between the church and the insurance carrier can yield a positive result in many situations. In the event a suitable resolution cannot be completed, the church can seek relief for a denied claim in the courts.
• Denied Hail Damage Claim Report* (2 pages) – This report illustrates steps taken after a denied wind/hail claim. As noted above, steady negotiation with an eye on the time limit for filing a claim is important. The best practice is to file claims as soon as possible after an injury or weather event. In Louisiana claims must be filed within two years of the event in question.
• Policyholders Release* (3 pages) – When a negotiated resolution to a claim dispute has been reached, the church’s insurance company will require a Policyholders Release to indemnify the insurance company and detail the remediation. This sample release is the final disposition for the disputed wind/hail claim above.

   Seminar Outline

   Seminar Slide Deck

   Seminar Content

   Church Law & Tax

   Alliance Defending Freedom

   Michael Best