Insurance is without a doubt the most important issue we can cover, because a church that thinks" it is insured but is not insured or is under-insured, is going to face some serious problems. Particularly, insurance is valuable because most policies cover for defense costs, which can range in the thousands of dollars, even for a frivolous case.
The following questions are very important in determining your insurance:
1. Who is your carrier? Does this carrier routinely insure churches, on a broad scale?
2. In case of a fire loss, is your building insured for full replacement costs? In the alternative, in the event of a fire loss, is your church insured to value?
3. In case of a fire loss, does your church's policy have a co-insurance penalty? Most policies state that in the event of a fire loss, if your building is not insured at least up to a certain percentage (usually 80-90%) of the fair market value or actual replacement value of your building, at the time of the loss, there may be a penalty involved. This means that you may have less insurance coverage than you think in the event of catastrophic fire loss.
4. Does your church's policy have non-owned and hired auto/vehicle coverage for your church? This coverage allows a person who is on church business or in the furtherance of church activities, who is driving a vehicle not owned by the church, to have insurance coverage in the event of an accident. However, you must have the right clause in your policy.
5. Does your church's insurance policy have a sexual misconduct endorsement?
6. If you have employees, have you complied with state laws regarding workers compensation insurance? This includes church schools and day cares.
We cannot stress enough how important it is that you understand what type of liability and other insurance coverage that you have available to your church. Be sure to ask your agent what exclusions apply to your policy."