22 Jun 2010

When Church Insurance Company Sues One of Your Members

Founder Raul Rivera

Compliance with the law does not mean compliance with your insurance policy

Edward started his Saturday just like he did every Saturday: he went to the church to get ready for his participation in the church Kid's for Christ outreach.  But, this Saturday was different.  It was his turn to do a run in the church van to pick up some of the children.  Because Edward did not have a CDL license, the children's pastor clearly instructed Edward not to transport more than 14 children at any one time.  "That will keep us in compliance," thought the children's pastor, who remembered that the law does not let an individual transport more than 15 people in one vehicle.  He wanted to make sure that Edward stayed within his legal limitation. 

The church made every effort to comply with the law

Edward gladly complied, making three runs without any problems.  However, on his fourth and final run, with 7 excited children riding in the van, Edward ran a red light in his hurry to get back to the church on time...which resulted in an accident that injured three of the children! The children's pastor visited the three children while they were in the emergency room and had a time of prayer with them and their parents.  Between the three children, there were two broken arms, one broken leg that required surgery, and a bill of $120,000.00.  The church filed a claim with the church insurance company and the insurance company paid it.  Whew!  That was close. 

Was Edward negligent?

The church was very supportive of Edward and understood that he was trying to serve the church by picking up the children.  He still could not figure out how he ran the red light.  He just did not see it.  Seconds earlier he saw a text message come in and briefly looked at his phone to see whom it was from.  Before he knew it, he was in an accident.

Edward gets sued

Three months after the insurance company paid the claim; Edward got a letter from the church's insurance company letting him know that they wanted him to reimburse them the $120,000.00 for his gross negligence.  They also stated that they would sue him in court if he did not agree to their terms for repayment of the claim.  Confused and completely surprised by this, Edward first took it to his pastor.  But he, too, was bewildered by the lawsuit against Edward, and so the pastor took it to the church attorney, asking, "Can our insurance company sue one of our members for the claim that the church filed?"  Unfortunately for Edward, insurance companies have the right to seek reimbursement from the person or entity legally responsible for an accident after they have paid out money on behalf of the church.  This is known as Subrogation.  Who would have thought the the same company that is supposed to protect the church, sues one of its members? Huh?  Lord save us from ourselves.

Get the right people listed as insured under the church policy

After inspecting the church insurance policy, they noticed that the policy covered the acts of the board of directors and employees but it did not cover volunteers and members.  Getting the members and volunteers of the church listed as insureds is not automatic.  In fact, you have to specifically request it.  Since Edward was not listed as insured on the church policy, he was not protected from being sued by the church's insurance company.

Get an insurance policy and cover the right people

The number of churches and ministries that do not have an insurance policy of any kind is a surprise in itself.  Though many pastors know of the real possibilities that exist in today's litigious society, they see insurance as an expense that brings no benefit.  I see it differently.  It is an asset, because it protects the wealth and prosperity of the church.  When getting a general liability insurance policy, make sure that the policy covers the board of directors, employees, and church volunteers, including members.  This is very important.  Incidents like the one Edward went through are frequent.  The church was diligent to make sure they complied with the law, but it failed to spend adequate time reviewing its insurance policy to make sure the right people were covered.

Many different types of church insurance

Did you know that there are over 30 different types of liability insurance?  That does not include property, theft, missions' travel, fire, key man and many more.  Getting the right policy is absolutely important.  We have added the topic of church insurance to our conferences because getting the right insurance policy is a must.  Have you spent time lately thinking about insurance for the church?  You may have felt intimidated by the number of policies that exist.  With the right information, you will be able to get the right policy that provides maximum coverage at the best price.

Please feel free to comment. We always appreciate good dialogue. However, we do moderate each comment to ensure that it is on topic and not derogatory to other participants. We ask that you keep your comments brief and pertinent to the topic so that others may benefit.

Raul Rivera

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