Church Insurance: Cost, Coverage & Top Providers

As its name implies, general liability insurance provides a wide range of coverage. It addresses three areas of risk for a church: property damage, bodily injury, and personal injury in the form of libel, slander, and reputation harm.

Two common GL claims for a church are as follows:

1. Someone trips and falls and is injured in the sanctuary.
2. Your church causes property damage to a rented space.

Most church events succeed because of volunteers, but volunteers create a gray area for liability policies: are they covered or not?

Most policies do include coverage for them, treating them a bit like an employee. However, check with your agent to ensure you do not need to add them as additional insureds. If you have lock-ins with children or teens, see to it that your agent is aware so that the proper coverage is in place.

For religious organizations, it is crucial to ensure your liability policy includes abuse and molestation coverage. Most to none include that coverage, so you would have to add it to your policy as an insurance endorsement or a standalone policy.

Commercial property is first-party coverage for a building, its contents, and its equipment. Property covers named perils, so if your organization is affected by one, such as fire or theft, you can file a claim with your property insurance company to either repair or replace the damaged items.

Commercial property makes the most sense for a church that owns a building. But if it rents a space or sets up weekly in a public venue like a school, then inland marine insurance — another type of property — is the better choice.

Organized religion in America predates the American Revolution. Many church buildings are hundreds of years old, and Church Answers‘ informal study in 2022 found that the average age of a church building is over 90 years old. Older buildings present insurance risks; outdated wiring and plumbing, older roofs, and toxic construction materials, like asbestos, can all translate into a higher premium.

While workers’ compensation insurance is not federally regulated, it is governed by state law and required in 49 states (Texas is the main exception for private employers); clergy treatment and thresholds vary by state. If an employee becomes injured or ill because of their job, it covers the medical bills and some form of wage replacement until they can return to work.

Some claims you may encounter are as follows:

• The pastor breaks a finger using a hammer
• The worship leader falls off a ladder trying to fix a ceiling-mounted speaker
• The children’s ministry leader hurts their back moving storage units

Many nonprofits try to save money by having employees and members do “the work themselves” instead of hiring outside help. If your church regularly uses volunteers for activities where they could be injured, such as a church workday, check with your agent to see if they qualify for workers’ compensation or if there is a blanket endorsement for volunteers available.

Another avenue of coverage could be the no-fault medical payments portion of GLI, but keep in mind that even if that coverage applies, the limits are usually $5,000 to $10,000.

Often referred to as E&O, professional liability is a type of policy for religious leaders who provide counseling services. Pastors have an elevated level of responsibility in that they can also function as counselors and, depending on the state, are considered mandated reporters.

Some examples of a claim can be as follows:

• Failure to report suspicious, criminal, or suicidal behavior
• A couple claims poor counseling led to their divorce and financial hardship

Professional liability helps in these situations by paying defense fees, court costs, and settlements within the limits of the policy.

This coverage is more common in businesses to protect board members who are not typical employees. Most churches are governed by some sort of board, and while many states offer some immunity for volunteer board members, there may still be significant defense costs involved and no immunity if the action is considered egregious or gross negligence.

Because of that risk, you should consider this coverage. D&O claims often make the news, such as the following:

• The church has a capital campaign for a new building, but after raising the money, it decides to do something else entirely with the funds.
• The offering is down because a member of the board is stealing some of it.
• The board is aware of accusations of misconduct against the pastor, but instead of investigating it, they cover it up.

D&O coverage, like professional liability, handles court costs, related expenses, and settlements.

Special event insurance is a type of liability policy that provides coverage for a limited period. It can also reimburse any nonrefundable deposits or loss of money that may result from event cancellations. These events often draw large crowds and represent a significant investment by the organization.

If your church owns a vehicle, then it will need to be insured. A personal auto policy won’t cut it since the vehicle is owned by your organization.

Commercial auto insurance is one policy with multiple coverages. Liability is third-party coverage for damage and injuries to other parties when your vehicle is at fault. Meanwhile, first-party coverage, such as collision and comprehensive, repairs the damage to your vehicle regardless of who is responsible.

If you have volunteers regularly transporting members around — perhaps your church has a ministry that drives shut-ins to church on Sunday — ensure you have a copy of their insurance on file. Since this would not be a strictly commercial use of the vehicle, their personal auto insurance should cover the loss.

But that’s why it is important for the church to ensure the drivers have valid auto insurance: if there is a loss and they are uninsured and at fault, the other injured parties could try to come after the church for compensation.

Cyber liability insurance helps your church respond to and recover from cyber incidents, like a hacked email account, donor-data breach, ransomware, or fraudulent wire transfer, and covers third-party claims alleging you failed to protect personal information. It can be added as an endorsement to a church package or written as a standalone policy (often needed for higher limits).

While not a line of insurance, when used correctly, a business liability waiver can help your church. Think of insurance as your last line of defense in protecting the church, with the first being training and having proactive policies and procedures to diminish any risk exposure. The next line of defense is to use liability waivers.

A liability waiver, sometimes called a release of liability or a general waiver, is a document that a church has visitors or patrons sign to acknowledge risks and release the business from claims arising from injury or loss. It cannot violate state law and is common in recreational, fitness, and high-risk businesses.

Church insurance is a combination of policies that can help your organization when it suffers a loss. The loss can be to first-party property, like a lightning strike burning out the sound system or a liability claim from someone tripping and falling in the narthex. In either situation, you can turn to your insurance for financial assistance to resolve the loss.

A church represents a unique mix of liability with so many different risk exposures, from volunteer leaders to outreach special events. Church buildings are often large and worth millions. When you combine the natural risk of a church, the current atmosphere of inflation, and the chance of natural disasters, the cost of church insurance has risen significantly.

In fact, the premiums have risen so high that many churches are struggling to find a carrier that will insure them at a rate the church can afford. Since 2023, reinsurance costs have also increased for many lines, contributing to higher premiums.

Usually no. For most churches, full self-insurance is impractical, as relying on self-insurance requires a substantial amount of funds that are reserved exclusively for the purpose of insurance. Of course, setting such money aside hampers the abilities of a religious organization in pursuit of its ministry. There is also the question of whether it is permissible.

Commercial auto and workers’ comp are two required types of insurance, and many states do not have a provision for self-insurance for those coverages. Alternatively, if the insurance premium has risen to $30,000 annually and the church has several million dollars that it can set aside, it could be an option for the board to explore.