Religious Organizations Should Know about Insurance

Q: Our religious organization operates on tight budgets. How important is it for us to have insurance?
A:  Very. Although the law does not require you to purchase insurance, every religious organization is subject to significant risk. It does not matter if the organization is large or small. Common risks  include storm damage, flood damage and damage resulting from other natural disasters. In addition, your organization may be held liable for a death or injury that may occur on your property in the course of your organization’s activities or as a result of opening its doors to community activities and outreach programs.  

Q: Does it really matter what kind of insurance we buy?
A: Yes. Since insurance policies for religious organizations provide a variety of limitations and exclusions on coverage, you should make sure you have sufficient coverage to address potential liabilities. Religious organizations must be aware of purchasing adequate coverage for claims involving, for example, sexual misconduct or slip-and-fall incidents. If your organization has purchased insurance that covers up to $100,000 per claim, and someone brings a $1 million law suit, your organization’s policy will not cover the loss if the injured party’s award exceeds the amount of insurance coverage. The injured party then may sue the organization’s board members directly.

Most states have enacted laws limiting liability of religious organization officers and directors, and in some states, these laws protect all organization volunteers. Such laws often immunize uncompensated directors and officers from legal liability for their ordinary negligence committed within the scope of their official duty.  These laws generally provide no protection, however, for willful and wanton conduct, intentional or criminal acts or gross negligence.

Q: What kind of insurance coverage do we need for personal injury and property damage?
A: Make sure your policy provides liability coverage that covers the many forms of personal injury and damage to the property of others. For example, the policy should cover slips and falls and expense compensation for any person injured on your organization’s property. Be aware that medical coverage on some policies is minimal and additional coverage may need to be considered. 

Q: What about insurance for employment-related liability?
A: If your religious organization has a staff, make sure your policy covers employment-related claims such as wrongful dismissal and discrimination. Many leaders of religious organizations assume, sometimes wrongly, that their general liability policy covers such claims. In addition, your organization’s board must be sure the insurance policy covers potential claims that can be brought against your officers and directors directly. While uncompensated directors of non-profit organizations have limited immunity from personal liability under both state and federal law, this protection does not cover acts that are willful and wanton, intentional , criminal or gross negligence.

Q: We’ve had a problem with theft at our building. What should we look for when buying insurance to cover loss from theft?
A: Make sure your insurance policy provides adequate coverage for theft, including embezzlement and other misappropriations of your organization’s funds and securities by employees and others who have access to your money or property. Sometimes a religious organization must obtain a separate endorsement for this type of coverage.  

Q: Our organization owns a bus that we use to transport our members. Do we need special insurance for that?
A: Yes. Your board must make sure your insurance policy covers injuries and damage resulting from the use of vehicles owned by your organization as well as damage caused by members who use their own vehicles while performing services for your group. While a driver’s personal insurance may well cover the damage in such a case, your organization likely will be sued if the driver’s coverage is inadequate. In most cases, coverage for vehicles not owned by your religious organization must be obtained as a separate endorsement.


This "Law You Can Use" legal information article was provided by the Ohio State Bar Association (OSBA). It was originally prepared by Charles Tyler Sr., an attorney in the Highland Heights  firm of Charles Tyler Sr. It was updated by William J. Reynolds, an attorney in private practice in Cincinnati. 

Articles appearing in this column are intended to provide broad, general information about the law. This article is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from a licensed attorney.



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