For many church leaders, insurance coverage and terms can be confusing and complex. When purchasing or reviewing coverage, it is helpful to understand the key terms you will encounter. Consider these core terms and topics below.
The Insurance Contract: Most church insurance policies follow a similar format and structure that includes declarations, common conditions, and specific forms for each line of coverage. The declarations contain basic information about the policy, including the name of the insured, the inception and termination dates of the policy, the policy number, and the amount of the premium. The common conditions include information that applies to several categories of coverage such as property and liability. That way the information does not have to be repeated for each line of coverage that is purchased. Finally, forms are then used to address the specific provisions for each line of insurance.
Endorsements (sometimes called riders in health and life insurance policies): Used to change the insurance policy. An endorsement can expand coverage, reduce coverage, add a new provision to the policy, or modify an existing provision of the policy. An endorsement can be handwritten, typed, or in preprinted form. If legal, an endorsement takes precedence over the standard policy.
Deductibles: The amount the insured must first pay before the insurance company becomes liable for financing the loss. For example, if the church has a $2,500 deductible and has an insured loss of $10,000, then the church pays the first $2,500 and the insurance company pays the balance of $7,500. As the deductible increases, the premium for the policy decreases. The deductible applies to each occurrence.