Safeguarding Your Church: The Importance of Retaining Insurance Policies

Robert Tyler & DeRicci Keller

July 31, 2023

Real-Life Success Story: How Insurance Records Saved the Day

We once had a case for a client who was sued by the government because the client was a tenant in a building that sat on contaminated soil from discharges that occurred 20 years earlier by other parties but were more recently discovered. Tenants and property owners can have liability for the costs of clean-up even when they were not responsible for the contamination.

Thankfully, my client had boxes of business records from 20 years earlier that were forgotten and collecting dust year after year. Those boxes came to our client’s memory, and we found invoices for insurance policies and were able to track down the carrier. The carrier honored the policy and insured our client for his defense and paid for a settlement on the claim. Had our client not kept that box of records, he may have had to file bankruptcy over the claim.

The moral of the story is to maintain all your insurance files – FOREVER! With digital storage, it is easier than ever.

Liability Risks for Churches and Religious Organizations

For churches and all religious organizations, it is especially important for you to maintain your insurance records in light of the significant amount of abuse claims being brought for abuse that happened years earlier, even when the church leadership was not at fault themselves. In some situations, churches are being sued for abuse that occurred by adult volunteers outside the presence and knowledge of church officials.

Understanding California's Assembly Bill 218

In January 2020, California enacted Assembly Bill 218 (AB-218) which extended the time limit for commencing an action for recovery of damages suffered because of childhood sexual assault.  Under this act, a victim has until they are forty (40) years old to initiate an action to recover damages for such an assault.  The action may be filed against (1) an individual person for committing the act of sexual assault, (2) any person or entity who owed a duty of care to the victim if a wrongful or negligent act by that person or entity was the legal cause of the sexual assault, and/or (3) any person or entity if an intentional act by that person or entity was the legal cause of the sexual assault.  Consequently, decades old sexual abuse related claims against a church or religious organization such as negligent hiring, negligent supervision, negligent retention, and negligent failure to warn are becoming more frequent.  

We have experienced circumstances where clients believe they had insurance but did not know the insurer or the broker and the church officials in charge had all passed away.  This is tragic.

Protecting Your Church: Adding Sexual Misconduct Liability Insurance

Insurance Coverage for negligence claims against a church or religious organization for sexual abuse may be contained within their commercial general liability policy’s bodily injury and/or personal injury coverage provisions and it is recommended that you verify with your insurance carrier that such coverage exists.  Many actions against a church or religious organization for sexual assault may be filed many years after the actual assault, especially in California.  

If your current general liability policy does not provide coverage for bodily injury and/or personal injury suffered because of the negligent acts of the church or religious organization, you should discuss adding such coverage to your current policy or you should obtain separate sexual misconduct liability insurance to protect your church or religious organization.

Ensuring a Secure and Protected Legacy

To avoid the expense of having to prove the existence of coverage at any given time, it is vital that churches and religious organizations maintain and retain all insurance policies in an easily accessible place.  If any of your prior insurance policies have been misplaced or destroyed, you should reach out to your past insurance brokers or carriers and obtain copies of each missing policy so that the policies are on hand should you need them.

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