Common insurance risks for houses of worship and nonprofits
There are many types of nonprofits, including educational, environmental, social action, animal rights, healthcare, and others that service a host of good causes. Though these nonprofits have to comply with certain laws and regulations to qualify for nonprofit status, they are in many ways similar to commercial businesses. Churches and other religious organizations, too, have many of the same insurance issues.
Both houses of worship and nonprofits need to protect themselves against the following types of risks.
Structural property damage
This includes property damage to the church, synagogue, or other religious building. For nonprofits, it includes all of the offices where the nonprofit does business.
Personal property damage
Churches and houses of worship need to protect contents such as furniture, books, religious artifacts, and clothing, as well as any office supplies and personal property of clergy and staff. Nonprofits have to insure against damage to equipment and material possessions that apply to their venture.
Business interruption loss and continuing expenses
Just as commercial ventures have to worry about business interruption loss, churches and nonprofits do as well. While repairs are ongoing, buildings are being rebuilt, or new offices are being located, there are still continuing and necessary expenses. These include expenses such as mortgages, loans for operating expenses, insurance premiums, and salary for staff.
Business interruption loss and lost profits
Churches and nonprofits, by IRS definition, are not in the business of making profits. So, insurance companies may argue that there should be no profit proceeds included in your claim. However, having tax-exempt status does not necessarily mean a church or nonprofit cannot generate revenue. Nonprofits often seek donations and grants to fund research and provide services. Some nonprofits even sell merchandise to fund their operations. At McWherter Scott & Bobbitt, we work with outside experts to make sure your organization gets the insurance proceeds it deserves.
Churches and nonprofits are modern organizations. Religious organizations have congregation databases, lists of donors who support them, vendors on the ready to help maintain the building, and other sensitive data on their computers and hard drives. Nonprofits can have mountains of data for record keeping, information related to the people they help, the services they provide, and their employees or volunteers. The loss of this information can bring these organizations to a halt. Our Tennessee attorneys work to get insurance proceeds for damaged hardware and software, plus compensation for any data that was destroyed and must now be rebuilt.
Churches and nonprofits that can’t run their services or operations while repairs are ongoing may need to rent new facilities or pay to share space with other organizations. Your insurance should cover the cost of the move to the new location, the associated rent and expenses, and the move back, and perhaps the cost to notify clients and congregants about the move. Hospitals, health providers, and other non-profits may also need to rent or buy new equipment and tools to continue serving their members and the community.
When hurricanes, fires, tornadoes, and other disasters strike, the local residents and community often turn to their religious base for spiritual support and/or nonprofits for healthcare and other types of aid. After a local disaster, it’s critical for people who have lost their homes and possessions that religious institutions and care providers be up and running as quickly as possible. Insurance coverage may be available to fulfill these needs.
Insurance disputes often revolve around the cost and time needed to repair or rebuild, and the value of the contents and possessions. Our attorneys negotiate with insurance companies about who will do the repairs, whether replacement damages should be paid, and whether any exclusions or limitations in the policy apply – advocating aggressively for your organization.