Not all Sexual Abuse Coverage is Created Equal

In a church commercial package policy, there are two main parts - coverage for those things you own and coverage for those things that you do. One is called the Property part, the other is called the Liability part.

In the typical church commercial insurance package, the liability coverage is subdivided into several parts. The basic coverage that protects your church from most of your negligent acts is called the General Aggregate coverage. The coverage is on your policy's declaration pages as a "limit of insurance." Often, it is $1 million or more. In addition, there are several other coverages that have their own limits, which are listed separately. These often include Pastoral Professional Counseling, Directors and Officers, and Sexual Abuse and Molestation. In this post, I want to zero in on the latter. Hang in here with me. This may be complicated and lengthy, but it could literally save you millions!

Not all Sexual Abuse and Molestation liability forms are created equal. Here's an example:

Let's say you look at your policy and it says you have limits of $300,000 Occurrence/$300,000 Aggregate to pay claims charged to the church for sexual abuse. In addition, you are carrying a $5 million liability umbrella excess liability policy.

A woman in your congregation comes forward, revealing that a youth director touched her inappropriately six years ago when she was a teen. Her admission prompts others to come forward and, before long, a total of nine women have made claims against your youth director for sexual abuse. You look at your policy and it appears to offer $300,000 per victim and, when you add in the umbrella, another $5 million in coverage.

It may not. The largest for-profit church insurance company in the US, for example, uses what's called "single perpetrator" language in its sexual abuse coverage form. That means that it defines an "occurrence" as any and all acts commited by the same person or persons over any period of time (emphasis mine.) Translation? If nine people have been abused over six years by a single perpetrator, this insurance company will treat it as one "occurrence" and pay no more than a single occurrence limit (in this case, $300,000) to spread among nine victims.

Also, you will find when you read the language in this company's umbrella excess liability form that ALL claims for sexual abuse are excluded. So, even though you have paid for $5 million in excess coverage, it does not respond to help you pay abusive acts claims.

The Insurance Board Sexual Abuse and Molestation coverage, by contrast, is written on a "per victim" form, treating each person's claim as a separate occurrence. Our limits are $1 million per occurrence/$2 million aggregate, so the church in this example would have $2 million to pay the claims of nine people, rather than $300,000. What's more, our Umbrella Excess Liability form DOES include an additional
$5 million to pay abusive acts claims, giving each of our participant churches a total of $7 million of abusive acts coverage.

Which would you rather have available to your church? $300,000 or $7 million? The range of compensatory award information for plaintiff and defense verdicts rendered in cases of sexual abuse in schools in 2009 was $3,000 to $105,000,000, with the award mean of $3.3 million. (source Praesidium, our partner at the Insurance Board in sexual abuse prevention).

Pull out your policy and check your limits and then give me a call at 269-274-1567 or email me at insuranceboardmichigan@gmail.com. I'll be happy to help you decipher the form and make recommendations.

Welcome to the Insurance Board in Michigan

Hello! Thanks for following or subscribing to this blog, intended for members of Presbyterian Church USA, Christian Church Disciples of Christ, and United Church of Christ in Michigan. Now that there are 80 churches enrolled in the Insurance Board program in Michigan, it is going to be important for me to leverage technology to stay in touch with all of you. We have a high service standard that we intend to sustain, and a blog this this will help us do so.

Please follow this blog (sign up at right by email or subscribe)! This blog is going to be the best way for Michigan participants to stay abreast not only of the benefits and improvements in our insurance program, but also of critical issues that affect the protection of your ministry. Later this week, I will be announcing a drawing for a very special prize. Those who subscribe before June 1 will have a chance to win big!

Our first post, which will be published later today, will be "Not All Sexual Abuse Insurance Coverage is Created Equal." In it, I will compare and contrast coverages, helping you make the right decision about what is appropriate for your ministry.

In future posts, I will be posting guest articles from members of our staff on issues such as accurate property valuation, electrical inspection and maintenance, and Safe Conduct, our fabulous workbench for keeping kids safe. We'll have some fun, too, uploading pictures taken by both me and you that highlight the ministries in Michigan of our three denominations.

So, let's go! Jump in and subscribe and let's work together as Partners in Protection!