Pastor Chris Clark at North Parkway Assembly in Pekin, IL received a call that he did not expect.

“Last summer, I received a troubling call out of the blue from our insurance agent - our carrier, who we’d been with for 14 years, was about to drop us. Bewildered, I asked why?

We had a pipe freeze the winter before, and the claim was a pretty large one, but that’s the point of insurance, right? He said the problem wasn’t the recent claim, it was a long history of frequent claims. I learned that over the 14 years we’d been with our carrier, we had turned in 16 claims. They saw us as a liability, and elected to non-renew our policy.”

Pastor Chris’s experience is not unique. Churches across the country are finding themselves in similar situations: policy cancelations or huge rate increases, making insurance unaffordable.

Rate increases for 2024 have been in the 20% range and potentially much higher for churches that have had previous claims or significant increases in property value.

Why are prices skyrocketing?

There are all kinds of reasons for these increases.  Natural disasters have been on the rise and have been occurring in particularly expensive places like California and Florida. These have particularly drastic impacts in those regions, but the entire insurance industry shares the burden.

Construction costs have also seen massive increases overrecent years. Inflation in property values and the associated cost to rebuild are a consistent driver of insurance cost increases that have nothing to do with your claims history.

Beyond these obvious reasons, other factors like increased litigation and the professionalization of roof claim-and-repair companies have also contributed to the current storm of cost increases. 

So, what can churches do?

Insurance providers are working to remain profitable, but how do churches deal with the rising costs? There are no easy answers.

Chief Operating Officer of the Illinois District Council of the Assemblies of God Andrew Schnieder says, “As with any other budget crunch, the money must come from somewhere. There are probably some changes that can be made on your policy to save some money, but don't put the future of the church at risk by under-insuring. “

Consider if your church needs certain additional coverages like earthquake or mine subsidence.  Churches can also explore reducing the insured value of the church building to 80%. This might be particularly useful for a church that is not fully utilizing their facility and would build back smaller if given the change.

Churches should also shop around to ensure that the quote they have received is fair. However, as Schneider notes, “It’s important to understand that moving carriers may yield a better rate for the first year or two after which the insurance company may bring your cost back in-line with the market.”

Looking beyond the current renewal season, churches should work to reduce claims. Most church leaders understand that insurance companies base their rates on predicted losses. A church's good claims history doesn't necessarily reduce the risk of future losses, but it can help. In particular, churches should work to avoid Predictive Claims which are losses over which they likely had control; things such as a burst pipe, falls/accidents, or an at-fault fire.

“The long-term solution is to carefully consider what type of claims should be submitted to insurance. Just because a loss is covered by the policy and is greater than the deductible doesn't mean it should besubmitted.

This is particularly true in cases in which the insured church demonstrated negligence in the cause for the claim. For instance, an insurance underwriter views damage from a burst water line differently than storm damage that blew a neighbor's tree onto the church roof.

The church likely could have prevented the frozen water line whereas it had no control of the neighbor's tree.”

If the worst-case scenario happens and the church’s policy is not eligible for renewal, the church should explore all options to obtain coverage as quickly as possible. This would include expanding the search beyond church-specific carriers which dominate the church market.

The imperative is two-fold; not only does the church need insurance to cover potential losses and liability, but if the policy lapses before new coverage is secured then it will make it even harder to find coverage. Insurance companies are very wary of writing a policy on an entity that has been uninsured for any amount of time.