12 Insights for Churches Challenged by Property Insurance

I’ve never perceived property insurance as part of my stewardship work in my thirteen years at Discipleship Ministries. However, through the local church where my wife and I attend and where I serve on the finance committee, I realized something serious was happening in the world of church property insurance. In 2023, the church had paid $21,856 for insurance coverage when the insurance carrier abruptly canceled the policy eight days before renewal. As church leaders scrambled to get coverage, they ended up with a 2024 insurance bill over $93,000! As I began speaking with people about this, I discovered that many churches also faced steep renewal increases.

During the last week of September, I attended the national meeting of annual conference treasurers from across the U.S. and was not surprised that local church property insurance costs was on the agenda for the gathering. In a presentation hosted by the United Methodist Insurance Program (operating as part of the General Council on Finance and Administration) and their exclusive, endorsed agent, Sovereign Insurance Group, the attendees were brought up to speed on what is happening in the marketplace for church property and liability insurance. Based mostly on the information in that presentation, I offer these insights to local church leaders.

1. THE CHURCH INSURANCE MARKETPLACE IS NOT A HAPPY PLACE RIGHT NOW.

It’s easy to say insurance companies are the problem, “squeezing more and more money from churches trying to do good and transform the world.” I learned there is also some tough going for insurers as well. It is getting harder to get companies excited about insuring churches. Mentioned often was a “continued lack of carrier profitability.” Like any private business, your insurance provider is a company that is accountable to its shareholders to make a profit. A diminished opportunity for profit will move companies away from writing insurance for churches, limiting competition, which, in turn, hurts local churches.

2. CLIMATE CHANGE IS A BIG CONTRIBUTOR TO INCREASED INSURANCE PREMIUMS.

The severe weather systems we have been experiencing are evidence of changing climate patterns and are increasingly damaging property and driving up claims. As I’m writing this, communities are still reeling from the impact of Hurricane Helene. They are struggling to dig themselves out and rebuild their communities. In the winter, churches that have rarely had to worry about extreme cold are dealing with frozen and bursting water pipes.

3. ATTENDANCE AND INCOME DECLINE LEAD CHURCHES TO DEFER MAINTENANCE.

When congregations shrink and budgets tighten, churches may delay the maintenance of their properties. Unfortunately, deferred maintenance can increase the risk of damage, making it more difficult and costly to insure the property.

4. LIABILITY LOSSES ARE ALSO PART OF PREMIUM INCREASES.

Insurance companies are seeing more claims and litigation related to church activities, including accidents on church grounds and allegations of misconduct. This heightened liability exposure means higher premiums for all.

5. GIVE CAREFUL CONSIDERATION BEFORE FILING SMALLER CLAIMS.

Filing a claim for minor damage may seem like a good idea, but it can lead to higher premiums, nonrenewal, and difficulty finding coverage in the future. In some cases, handling small repairs out of pocket may be more cost-effective.

6. MAKE PREMIUM PAYMENTS A PRIORITY; KEEP EXISTING COVERAGE IN PLACE.

Carriers do not consistently offer the same grace they used to when it comes to reinstatement. Once you lose coverage, it can be extremely difficult to find a replacement policy. Ensure your premium payments are prioritized to avoid lapses in coverage.

7. THE POOL OF INSURANCE OPTIONS FOR CHURCHES IS NOT WHAT IT USED TO BE.

If your insurance provider decides not to renew your policy, finding another option can be tough. The marketplace for church insurance is shrinking, leaving fewer alternatives.

8. IF YOU HAVE TO SHOP FOR NEW COVERAGE, START EARLY AND BE TRANSPARENT.

Begin looking for new insurance well before your policy expires, 90-120 days ahead, if possible. Be upfront about your church’s history, programs, and property condition. Transparency will help build trust with potential insurers.

9. DON’T SKIMP ON LIABILITY COVERAGE.

While reducing coverage to save money may be tempting, cutting back on liability insurance could expose your church to significant financial risk. Ensure that your liability coverage is adequate.

10. BE A CHURCH THAT TAKES RISK MANAGEMENT SERIOUSLY.

Churches that demonstrate proactive risk management practices are more attractive to insurers. Conduct regular safety audits, ensure that fire and security systems are up to date, develop policies for safe building use, and make sure sidewalks and steps don’t contribute to accidents. Churches that show they are actively reducing potential risks are less likely to face large premium increases or nonrenewal of policies. Check out our webinar featuring Jeff Koch, CEO of United Methodist Insurance, leading us through ways to make our churches safer.

11. EXPLORE VALUATION OPTIONS. WOULD YOU NOT REBUILD OR REBUILD SMALLER?

In the event of major damage, would your congregation choose to rebuild the church as it was, or would you opt for a smaller, more cost-effective structure? Discussing these options with your insurer can impact the cost of your coverage. It’s not always easy to do, but it’s worth exploring.

12. EXPLORE WAYS TO GET HELP WITH THE COST, SUCH AS SPACE SHARING.

Some churches offset their insurance expenses by sharing space with other groups or organizations. If your church has extra space, consider partnering with local nonprofits, schools, or other churches to share costs.

As property insurance costs rise, it’s crucial for church leaders to be proactive and informed. If you have questions, reach out to folks who live in the world of church property and liability insurance. Your annual conference may have insurance guidelines that apply to all churches (or a group plan for local churches). You can also contact the United Methodist Insurance Program (UMIP) office at GCFA with questions or for advice. By understanding the factors at play and taking strategic steps, your church can mitigate some of the financial burden while maintaining adequate coverage.