Leading insurer of churches won't pay for property disputes
By Vicki Brown
DES MOINES, Iowa (ABP) -- One of the
nation’s three largest insurers of congregations has backed away
from covering lawsuits filed as a result of church splits and
denominational disputes.
Since July, GuideOne Insurance of
West Des Moines, Iowa, has been adding the endorsement to new and
renewed policies for "directors and officers coverage." No specific
incident triggered the policy change, according to GuideOne general
council Tom Farr. “We’re just following the developments of the
church niche in general,” he said.
But the very public dispute over
homosexuality that erupted among Episcopalians last year “got us to
thinking," Farr said. "We had read about disputes among others over
property,” he added.
Insurance is designed to protect the
insured against “unforeseen and accidental events,” he said, but a
church split or disaffiliation is “clearly not accidental … not like
somebody running a red light. That’s an internal matter and not
either unforeseen or an accident,” he added.
Most churches and religious
organizations carry two types of policies – general and
directors/officers coverage. General policies usually include
property, bodily injury and personal injury coverage.
Directors-and-officers coverage typically is broad and covers claims
against wrongful acts or issues created by wrongful actions. “It’s
financial injury coverage,” he said.
Conflict between two factions in a
church or other religious organization often splits the body,
leading to a fight over property and assets, Farr said.
The decision to exclude those risks
"is purely a financial act,” he said. GuideOne should not have to
pay legal expenses for both sides in a lawsuit that erupts from
internal disagreement. “We felt that our policy didn’t cover it
anyway, but we decided to clarify” that stance, the attorney said.
The other two primary insurers,
Church Mutual of Merrill, Wisc., and Brotherhood Mutual of Fort
Wayne, Ind., apparently have made no changes.
Brotherhood Mutual’s policy already
has a limitation in place, and the firm does not plan to broaden it,
explained Mitzi Thomas, assistant vice president of corporate
communications.
Neither Church Mutual’s legal council
Charles Kirby nor corporate communications director Jay Lillge would
discuss whether the firm is considering a similar endorsement or
other limitations. A few Church Mutual policyholders indicated they
had seen no changes and had not heard about any pending changes from
company representatives.
“It’s unfortunate but something a
congregation has to consider," Farr said. "There is a business side
[to] running a church. [Schism can become like] a squabble between
business partners.”
GuideOne's endorsement will be
applied to regional and national religious bodies as well.
Denominations that are more centrally controlled generally and
individual churches and groups with provisions for splits in their
governing documents or property deeds are not as much at risk, he
said.
Brotherhood Mutual’s current
directors-and-officers policy provides $15,000 to cover the legal
costs of a declaratory judgment of ownership. The policy contains a
provision that requires the parties to solve the issue, and then the
insurance company will determine which party benefits from the
policy’s coverage.
“We will not pay both sides,” Thomas
said. “We don’t want to be caught up in the problem. We don’t feel
like we need to deny coverage [with a provision such as GuideOne’s].
We just don’t want to be caught in the middle.”
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