What an Insurance Audit for a Church Looks At and What It Finds

Insurance protects churches and other faith-based groups from things like property damage, lawsuits, accidents, and more. But many churches don't know how crucial it is to have regular insurance audits, which are like health exams to make sure they have appropriate coverage and are handling their risks.

This in-depth guide explains what an insurance audit for a church is, what it looks at, and what useful information these audits find. We'll also talk about how insurance audits can find problems, save money, and make sure your ministry's protection is right for the dangers it confronts.

Why Churches Should Get Insurance Audits

Insurance policies can be hard to understand since they contain a lot of technical language, have exclusions, and have limits that church leaders may not know about. The insurance needs of ministries alter as they grow and evolve. That's why it's vital to undertake audits on a frequent basis to:

• Make sure that the coverage matches the assets, activities, and risks that are already in place.
• Look for policies that aren't useful anymore or are too similar to others.
• Avoid claims that cost a lot of money yet aren't covered.
• Keep premiums and deductibles as low as you can.
• Make sure you follow the rules imposed by your church or the law.

If churches don't pay attention to insurance audits, they risk losing money or paying too much for coverage they don't need.

What an Insurance Audit Usually Looks At

1. What the Policy Does and Doesn't Cover

It looks at the numerous types of coverage (for example, property, liability, car, cyber, etc.) and how much each one covers.

Checks to see if the rules are fair based on how big the church is, how much the land is worth, and how risky it is.

1. Exclusions and Endorsements

Looks at things that can leave gaps in coverage, like natural catastrophes, sexual assault, or coverage for volunteers.

Checks for riders or endorsements that modify how much coverage you have.

1. History of Claims and Risk Exposure

Looks over earlier claims to see if there are any trends or problems that keep coming back.

Based on what the ministry accomplishes, it looks at possible new hazards.

1. Deductibles and Premiums

Looks at what is customary in the industry and compares premiums to coverage benefits.

Looks at how much the deductibles are and how they change the risk of losing money.

1. What the Contract Says

Checks the insurance needs in contracts with vendors, leases, and collaborations with the ministry.

Checks to make sure the church meets its word to provide coverage and issue certificates.

1. Following the Rules and Keeping Track of Things

Checks sure insurance certificates are current and filled out correctly.

Checks sure policies are in line with what the religion or the law says.

What Insurance Audits Say About Your Ministry

• Coverage Gaps

Audits usually show that the church is in a lot of danger since it doesn't have enough insurance or other safety measures in place.

• Policies That Are the Same

Some churches have rules that don't need to be there and spend more money without enhancing safety.

• Risks That Aren't Clear

Buying property or starting a new ministry project could increase risks that aren't covered by your current insurance.

• Ways to Cut Costs

Audits look for ways to save money, such as savings on premiums, improved coverage options, or bundling strategies.

• Issues in Following the Rules

If you don't have the right certificates or if the rules are out of date, you could break your contract or get fined by the government.

How to Prepare for an Insurance Audit

• Put all of your current insurance policies, declarations, and endorsements in one place.
• Put together a list of recent claims and loss runs.
• Look over contracts that say you need insurance.
• Learn about any recent changes in the ministry's activities or assets.
• Get in touch with your lawyer or insurance broker right away.

Benefits of Regular Insurance Audits

• You may relax knowing that your church is safe.
• Better planning and budgeting for money.
• Better handling of risks and stronger ministry.
• Better relationships with lawyers and insurance firms.

In the End

Churches require insurance audits to help them understand the confusing world of coverage, cost, and compliance. Regular, thorough audits help businesses preserve their purpose and community, fill up coverage gaps, and get the most out of their money.

Links Inside

• Learn more about the legal services that check church insurance.
• Look at our church's risk management and responsibility forms.
• Learn about what a church governance lawyer can do for you.

Other Sites You Can Visit

• ECFA Insurance and Risk Management
• Nonprofit Risk Management Center
• Insurance Information Institute – Nonprofit Insurance

This blog post is intended for information and does not give legal advice. If you want tailored insurance audit services, talk to a lawyer who specializes in insurance or church law.