Overcoming Insurance Hurdles
A Guide for Churches and Nonprofits
By Chad Olinger, CIC - Principal & Business Risk Advisor
The church and nonprofit insurance market is currently facing significant challenges, making it increasingly difficult for organizations to obtain adequate coverage. Previously, a competitive market worked to the advantage of the customer, but recent shifts have led to increased premiums and more stringent requirements. Understanding these changes and taking proactive steps can help churches and nonprofits better navigate this hard market.
UNDERSTANDING THE MARKET SHIFT
In the past, multiple insurance carriers competed to cover churches and nonprofits, driving down costs. However, in recent years, several key factors have contributed to the current market difficulties.
• INSURERS EXITING THE MARKET: Companies that have experienced substantial losses are withdrawing from the sector.
• REINSURANCE COSTS INCREASING: Larger reinsurance carriers, which provide financial backing for primary insurers, are raising their rates, which trickles down to individual policyholders.
• COVERAGE LIMITATIONS AND DOWNGRADES: Major providers have seen their financial ratings downgraded, affecting their ability to offer competitive policies and/or
forcing churches and nonprofits to carry higher deductibles with increased premiums.
These challenges have led to significant rate hikes, with property insurance costs increasing substantially. Many organizations are now seeing premium rates as much as double what they were in previous years.
PROACTIVE STRATEGIES FOR CHURCHES AND NONPROFITS
In the face of rising costs, churches and nonprofits must adopt strategic approaches to risk management and financial planning. Key steps include the following:
• INCREASE RESERVES AND PROPERTY DEDUCTIBLES: Setting aside funds within your budget can help offset the result of higher deductibles and lesser coverages.
• IMPLEMENT RISK MANAGEMENT STRATEGIES: Conduct thorough background checks, implement safety training programs (especially for children’s volunteers), and regularly review policies and procedures.
• BE CREATIVE WITH SPACE SHARING: Collaborate with other ministries facing similar difficulties via sharing resources and/or reducing costs.
• WORK WITH A PROFESSIONAL: Engage with an insurance advisor who has access to multiple markets and brokerages to find the best coverage options.
• KNOW WHEN TO SHOP VS. WHEN TO STAY: Evaluate whether switching insurers or modifying existing policies is the best strategy based on your specific risks and coverage needs
UNDERSTANDING YOUR COVERAGES
It’s essential to understand the various types of coverage available and how they apply to your organization.
• COMMERCIAL PROPERTY: Covers physical assets like buildings and equipment.
• GENERAL LIABILITY: Protects against claims of bodily injury or property damage.
• SPECIFIC CHURCH COVERAGES: Includes protections for religious expression, pastoral counseling, sexual misconduct, directors and officers (D&O) liability, etc.
• COVERAGE FOR VOLUNTEERS AND STAFF: Extends protection to those who serve your organization.
ADDRESSING CHURCH-SPECIFIC COVERAGES, INCLUDING SEXUAL MISCONDUCT COVERAGE
Church-specific coverages, particularly regarding sexual misconduct coverage, remains a pressing concern. Many insurers are tightening restrictions on these policies due to the increased risk of lawsuits stemming from past incidents. Changes in the statute of limitations mean that claims can now be filed decades after an event occurred, exposing churches and nonprofits to unexpected legal and financial risks.
To mitigate these risks, organizations should do the following:
• Conduct thorough background checks on staff and volunteers
• Implement structured safety training programs
• Review insurance policies to ensure adequate retroactive coverage
BUILDING STRONG RELATIONSHIPS FOR LONG-TERM PROTECTION
Ultimately, navigating the hard insurance market requires more than just finding a policy—it involves building relationships with trusted professionals who can guide churches and nonprofits through their unique challenges. Understanding coverage options, implementing proactive risk management, and knowing when to make changes can help organizations protect their mission and financial health in an increasingly difficult insurance landscape. By staying informed and strategic, churches and nonprofits can weather this challenging period and continue to serve their communities effectively.
Chad Olinger is a dedicated Principal & Business Risk Advisor at Hummel Group leading our Newark, Ohio, location. During his decade working in the field of education, Chad taught middle school and coached various high school sports, all while obtaining a master’s degree in educational leadership. Following his tenure in education, Chad spent four years in vocational ministry, gaining a deep understanding of churches, church-related ministries, and nonprofits.
In addition to his work with churches and nonprofits, Chad works closely with various industries, including logging, lumber, and manufacturing. His mission is to assist his clients in navigating the challenging market by helping them understand their coverage and find the plans that work best for their organizations.
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