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Church Barred from Suing Insurer

Obtain legal advice before signing an insurance contract.

Michigan
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Key Point 10-16.7. A liability insurance policy provides a church with a legal defense to lawsuits claiming that the church is responsible for an injury, and it will pay any adverse settlement or judgment up to the limit specified in the policy. Liability insurance policies exclude a number of claims. For example, some policies exclude injuries based on criminal or intentional acts and claims for punitive damages. A church has an obligation to promptly notify its insurer of any potential claim, and to cooperate with the insurer in its investigation of claims.

A Michigan court ruled that a church was barred from suing its insurer for property damage it sustained in a fire on the basis of a release agreement it signed and a two-year limitations period in the insurance contract. A fire damaged a church building and its contents. The church immediately notified its insurer, and the insurer began ...

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Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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  • July 1, 2009

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