Q: What liability insurance limits do ministries need?

A: Liability insurance protects ministries if someone sustains injury or loss in connection with ministry activities. It typically includes compensation for the injured party, the cost of defending you in court, and any court awards or settlements, up to the liability limits of your policy.

What are Coverage Limits?

When buying liability insurance, you’ll be asked to select coverage limits. These limits determine the maximum amount that the insurer will pay on behalf of the ministry (and covered individuals) if a claim is made.

Four Factors to Consider

Here are four factors to consider when selecting liability limits:

• The likelihood of loss. The more activities that a ministry engages in, the greater likelihood, statistically, that one of these activities will result in a liability claim. However, even a low level of ministry activity with a strong emphasis on safety won’t eliminate all loss; it simply means that the odds of a loss are reduced.
• The church’s assets. A plaintiff’s attorney typically won’t pursue a liability claim beyond insurance proceeds if the church has no significant assets. The greater your ministry’s liquid assets, the more likely it is that an attorney will seek additional funds.
• The likely damages a court would award for a loss. Juries in some locations are more prone to award higher damages than in other locations. Before selecting liability limits, check with a local attorney to gauge the “judicial environment” in your area. It’s also important that your ministry takes safety seriously. Having a sound risk management program in place will reduce not only losses but also their claim value.
• The ministry’s “appetite for risk.” Ministries have different views of risk. Your ministry may desire higher limits even though you’ve taken every precaution and have little in the way of liquid assets. Other ministries would rather pay less for liability insurance, and bear a greater risk that a claim will exceed the limit selected. Neither approach is right or wrong; it's just a matter of how ministry leaders view the risk of loss.

How to Decide?

In addition to thinking through the above factors, it’s a good idea to discuss your options with an independent insurance agent who has experience working with ministries. Working with an experienced church insurance agent can help you to determine what liability limits are right for your ministry.

Recommended Resource

• How Much Liability Insurance Do I Need?

More Questions?

Do you have a question that wasn’t covered in this article? Submit your question to Brotherhood Mutual’s Legal Assist team.

This information is intended to be helpful. However, it is not legal advice, and reading it does not create an attorney/client relationship. Every circumstance is different, and an organization's rights and obligations vary by jurisdiction. That's why we strongly encourage you to regularly consult with a local attorney as part of your risk management program. 

The information is accurate as of the date of publication; however, changes in law or regulation over time may affect the accuracy of the information presented.