For most churches, the choice of insurance involves little consideration and is based almost entirely on price, or in some cases on familiarity with an insurance agent who attends the church. Churches can and should do better. The choice of insurance should be the result of an intentional and rational process, and this can be facilitated through the use of an insurance committee.
The Bible says that "there is safety in having many advisers" (, NIV). A church is almost always better served when a committee of three or more members explores and recommends insurance coverage options. This is especially true when members of the committee reflect business and financial expertise. The committee makes its recommendations to the governing group, such as the board or congregation, which then makes the final decisions.
Here are five important tasks any insurance committee should perform:
1. Choose an insurance company
One of the main tasks of an insurance committee is to select an insurer. The committee should obtain quotes from two or three insurers. A final decision should be made on the basis of several factors, including but not limited to cost. It is often helpful to deal with an insurer that specializes in the church market.
If an insurance agent or broker is a member of your congregation, feel free to consider this person for the committee. But, be aware of a potential conflict of interest if the person is a member of the church board. Even if not a board member, be wary of doing business with this person's company since this may not be the best option when viewed objectively.
2. Identify risks to insure
Another valuable function of an insurance committee is to identify risks to insure. If one or more committee members are on the church board, they will be familiar with the full extent of the church's programs and activities and be able to provide invaluable input for selecting coverages. When evaluating risk coverage, here are some valuable tasks an insurance committee can perform:
• Check to see if unique items, such as stained glass windows, pipe organs, handbells, artwork, and sound equipment, require special "endorsements."
• Obtain appraisals of unique items to be sure they are adequately insured.
• Conduct periodic inventories of property to prove claims in the event of loss or destruction.
• Check to see if coverage is limited to the market value of damaged or destroyed property. If so, consider obtaining replacement cost coverage.
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