On Wednesday, May 7, James Forrest and Kellye Story joined Gallagher team members James Dick and Jon Barron for a complimentary live webinar, Top Legal Issues for Faith-Based Organizations. They provided faith-based organizations with current trends and helpful tips related to the insurance industry. The following discussion has been edited for length and clarity. Watch the full recording here.
The following information provided is for general informational purposes only and is not intended to be legal advice. While we strive to ensure the accuracy and timeliness of the information, laws and regulations are subject to change. We recommend contacting your Michael Best attorney for advice specific to your situation.
Understanding Insurance Coverages
Insurance can be broken into two large categories generally: property and liability.
Property refers to things we own. If your building burns down or your car gets damaged, we would want to receive compensation for that loss.
Liability refers to when someone wants to sue you for something that happened to them or a loved one while they were in your care.
To safeguard against potential liabilities, most organizations invest in umbrella coverage that guarantees access to the necessary funds.
Insurance Coverage Questions to Consider
When you are determining how much coverage your organization needs, it is important to keep the following things in mind:
- What is the age, status, and value of our building(s)?
- Who does our organization serve?
- Providing care to children will require additional coverage compared to organizations that only work with adults.
- Where is our organization located?
- Are you in a storm-prone area? Is your organization located in a place where security issues are a daily concern?
- Are you proactively mitigating risks or allegations of abuse?
- What are your policies? Are they well-documented? How do you screen staff and volunteers?
- Is your organization considering opening a coffee shop, thrift store, prison ministry, or school?
- Deciding to start any of these will come with an additional risk that should be discussed with your insurance company.
- Will other organizations use your space?
- Having a signed contract can help mitigate risks.
In Focus: Property Insurance
Over the past few years, the cost of property insurance has increased to a level that is causing questions and concerns for faith-based organizations. This is because, oftentimes, faith-based organizations have a large building in comparison to their yearly budget.
Since 2020, the cost of building has doubled. Now, insurance companies are rethinking the old standard of $100 per square foot. When determining costs, insurers are looking at things like:
- Building age
- Building materials
- Geographical location
Even if you own a building and have never submitted a claim, your costs have gone up. This can be frustrating for organizations with a tight or limited budget.
It is vital to have conversations with your legal and insurance teams when selecting property insurance.
In Focus: Background Checks
It is highly recommended to run background checks on all staff and volunteers. Often, organizations only require background checks for those working with children. But background checks don’t always catch everything.
To ensure your organization is taking every step possible to mitigate abuse, consider implementing the following measures:
- Require all staff and volunteers to complete a background check
- Run background checks at least every three years
- Run staff and volunteer names through the national and state sex offender registries
- Conduct in-person interviews with potential staff and volunteers to look for red flags
- Avoid any single-staff interactions, and always ensure multiple staff and volunteers are present
- Train staff and volunteers to know what grooming looks like
Tips to Address Insurance Issues at Your Faith-Based Organization
Document situations.
- When you submit a claim, document what happened and what you are doing to mitigate future risks.
Utilize the expertise of your insurance company.
- Consider meeting at least twice a year with your insurance company.
- During conversations, ask questions to ensure you are properly mitigating risks for things like volunteer events, building updates, background checks, etc.
Have great legal partners.
- Your team at Michael Best is well-equipped to help answer your legal questions.
For more information, or to discuss how these changes may impact your business, please contact our team.