A New Vision, A New Voice ~ The North Texas Conference
Report Any Potential Insurance Claim and Keep Even Expired Policies in Files
By JODI SMITH
Director of Connectional Resources
I recently had the misfortune of incurring an injury while at work when I fell down the stairs and sprained my ankle.
After a quick trip to the emergency room and a few days working from home, I was ready to return to the office. I did not miss any work time and had no plans to file a worker’s comp claim.
What I learned in the process, though, is that as the employer, I had an obligation to notify the insurance company of the injury, even though I did not believe a claim would ever be made. The church still has a duty to notify the insurer of a potential claim once something has happened that might someday result in a claim.
Policies generally require the insured to notify the insurer in writing, within a specified time, of any potential claim for all lines of insurance, including property damage, theft, abuse, injury or misconduct. Failure to do so can relieve the insurance company of any duty to pay a claim, defend the church in a lawsuit, or pay a settlement or jury verdict as a result of the damage or injury.
In my case, the claim would have been quite small. In many other cases, a claim can become quite costly. As a people of faith, we strive to be a people of grace and second chances. Our initial reaction to a more grievous or embarrassing claim might be to “protect” the church and perhaps even the perpetrator by not reporting the incident to anyone in the hopes it will never happen again. Or we may want to avoid reporting a claim for fear our insurance rates will increase.
In one case, a man sued a church claiming that he had been sexually molested by a church employee on numerous occasions over four years in the early 80s.
The church had changed insurers during the time that the victim was being molested, so two insurance policies were involved. Once the church became
aware of the claim, it notified only one of the two insurers. This company hired an attorney who filed a timely answer to the lawsuit.
The church did not notify the second insurer of the claim until nearly two years later because it had been unable to locate its policy, which was nearly 30 years old at that point. This insurer denied coverage as a result of the church’s failure to notify it of the claim in
a timely manner. The court upheld the insurer’s position, leaving the church with a $2.3 million loss, even after the first insurance company paid the first $1.4 million of the claim.
I have posted a list of records retention guidelines on the conference website. The guidelines list insurance policies as items that must be kept on file permanently. Failure to locate a policy does not excuse one from filing a claim.
Before the conference-wide insurance program, many of our churches held policies in their own names. Although maintaining these records takes up a lot of space, it is imperative that you keep them. It could be a costly mistake to misplace a policy.
I pray the Lord continues to bless you in your ministry and that we are all excellent stewards of the gifts entrusted to us so that every dollar given in faith is wisely used to make disciples of Jesus Christ for the transformation of the world.