This eight-minute video will give you a crash course on the top four changes your church will see as they migrate away from the State Farm policy.

State Farm is withdrawing from the church property and liability market here in Florida. State Farm® Florida is very unique in how they conduct business compared to virtually every other company here in Florida. This “uniqueness” will require your church to make some changes in order to receive the broadest coverage at the lowest possible price.

In the video I explain the following:
1) Flat deductibles (State Farm) vs. Percentage deductibles (every other company) for wind and hail losses;
2) Policies with no co-insurance provision (State Farm) vs. policies with a co-insurance provision (every other company);
3) No screening requirements for sexual abuse coverage (State Farm) vs. the screening required to secure moderate to high limits of sexual abuse coverage (every other company); and
4) Dealing with direct writing agents (State Farm) vs. dealing with independent agents (almost every other company.)

A brief introduction to the new educational series designed for those dedicated to tending to the financial affairs of the church.

This video provides an overview of the ways in which coverage can be written. It will aid the insurance layperson in his/her effort to understand and evaluate the church’s current insurance program.

Coming Nov. 1 2011 – Property Insurance

If your church is in Florida, then its insurance policy probably has two types of property deductibles: a low “flat” deductible that applies to most types of loss and a high “percentage” deductible that applies to some, if not all, types of wind related loss. This video is designed to help you understand the different types of percentage deductibles that may be available to your church and to understand the financial impact that each type carries with it.

“Simplicity is the ultimate sophistication.”  ~Leonardo DaVinci

A couple of months ago, we had a fire at my church.  There are a lot of things that you can do to reduce or avoid losses due to a fire.  This video illustrates how  our custodial staff’s diligence kept a small fire small.

Even Goodman, prompted to leave Florida by the storms of 2004-05, sees the plans giving the national government a greater role in the market a step in the wrong direction.

After all, Goodman said, he’s an example of how the market worked – the prices got too high, and he moved away. Reversing that trend is a mistake.

“We’re setting up a situation,” he said, “where it will make it affordable to live in dangerous places.”

I encourage you to read the whole article.

For Florida insurance woes, no shortage of suspects to blame

From climate change to lawmakers to a coastal development boom, why we are one active hurricane season away from a disaster that could doom the state’s financial future?

via For Florida insurance woes, no shortage of suspects to blame | Jacksonville.com.

I’m sharing this with you for a couple of reasons.  One, these headlines answer THE most frequently asked question I get from my church clients (outside of premium questions): “Why is the insurance company making us _______ (screen volunteers/ limit our drivers age to 25 or higher/remove a trailer hitch on the van/etc.)?”  Answer: They require the things they do because, every day, they see the bad things that happen to the people that are the church.  However, they don’t have to read the newspaper, they just read their claim reports.

But, most importantly, it is to remind you that, while liability insurance is important, it will only do so much.  You must stay vigilant when it comes to selecting leaders, developing and sticking to procedures, maintaining your facilities, and protecting your people… your church.

2008-09 Church Headlines

Lightning strike kills 1, injures 18 in Florida

Bolt struck near church function to celebrate Fourth of July

http://www.msnbc.msn.com/id/31740134/ns/us_news-life/
http://www.theledger.com/article/20090705/NEWS/907055055#

Church bus crashes; 1 killed, 6 in hospital

http://www.bpnews.net/BPnews.asp?ID=30874

5 Missouri children drown during church outing

http://www.cbc.ca/world/story/2006/07/10/missouri-drowning.html

Pomona Crash’s Sole Survivor In Stable Condition

60 Freeway Crash Kills 4 Young Members Of ______ Church

http://cbs2.com/local/Pomona.Freeway.Crash.2.697809.html

______ _______ Baptist mourns death of teen at Six Flags

http://www.wrdw.com/home/headlines/22702999.html

Texas Man Convicted Of Sexual Assault Of Child During Church Outing

http://www.kwtx.com/home/headlines/13838442.html

Girl on church outing swept into Niagara Falls river

Swollen river kills counselor, teenager

Members of a Maple Grove church group, were sucked into the Temperance River.

“The tragedy occurred as the group of three adults and five kids from the ______ __ ___ ____ ____ in Maple Grove wrapped up a day hike to Carlton Peak, said Sheriff Mark Falk. The hikers had waded into a pool above the gorge to rinse off.”

http://www.startribune.com/local/50033997.html?elr=KArksi8cyaiUeyD8_o8cyaiUiD3aPc:_Yyc:aU7DYaGEP7vDEh7P:DiUs

I understand completely.  Melissa, my office manager, will tell you that checklists and “staying-on-task” are not exactly my strong suits.  For this reason, I feel perfectly qualified to give you the “Hurricane Preparedness Guide for the Easily Distracted Pastor”.  It’s only two steps and even I can focus on two steps (especially when one step requires that I delegate everything).

Step #1: Send this e-mail to someone else.  Really.  Right now.  Go ahead and delegate it because, if you’re like me, you know that if you don’t do it now its probably not going to happen.  So, give it away but give it to someone that has the time to work with at least four committee heads on storm preparation.  (Some would say that your church should form a “Safety and Security Ministry (SSM)” and I agree.  The only problem is that it is already hurricane season.  If you don’t have a SSM now, then just consider this the “beta” product.):

• Building and Grounds Committee – Its the property that’s going to get damaged and these people know the property like the back of their hands.  Plus, they usually know how to build stuff (which will come in very handy).  By the way, Lowe’s has provided terrific instructions on building storm shutters at http://www.lowes.com/lowes/lkn?action=howTo&p=Safety/hurricanePrep.html&rn=RightNavFiles/rightNavSafetySecurity

• Community Outreach Committee – Even if you church comes through the storm unscathed, families in the area may not.  Don’t miss an opportunity to comfort and minister to people after the storm.  Mustard Seed Associates has an excellent article (and checklists) about compassion during a crises at http://msainfo.org/articles/lessons-learned-from-church-disaster-plans
  

• Finance Committee – The finance committee usually has access to things such as the insurance policy, bank contacts and, of course, the budget.

• Communications Committee – After a storm, you will need a way to let your members know what is going on and what kind of help is needed.  Since this will possibly have to be done without phones, e-mail or power, you’ll probably want to select a creative thinker that loves a challenge.

Step #2: Let your committee members come up with an awesome plan, however, make sure that they do the following three things right away:

1. Take photographs or video of all your property. Do you know how many folding chairs you have in your church right now?  No?  Good, because you have more important things to be thinking about.  However, in order to get claims paid quickly after the storm, you have got to tell the insurance company what you had before the storm.  This can be hard to do when your building’s contents are scattered across three counties.  Inventories are great but they take time and effort.  Taking photos and/or video now to use as a reminder later makes much more sense in the short-term.  You can walk though your church and get about 500 high resolution pictures on one, 2 gigabyte card in a fraction of the time it would take you to perform an inventory.  We have the technology; it would be wrong not to use it.
2. Get a copy of all your insurance policies, the Claims Department’s phone numbers and your agent’s phone number and put it some place safe.  Have hard copies of these items since you may be without power and the internet for a while.  Along with the photos, put this information in a secure place that won’t get blown away or wet e.g. a safety deposit box.
3. Know the answers to these three insurance questions since the answers can impact the final plan:

• Do we have wind and hail coverage? If you don’t, then most of the damage that can be caused by a hurricane is not going to be covered.
• What is our wind and hail deductible and do we have the money to pay it? If you have wind and hail coverage, you probably have a wind and hail deductible equal to 2-5% of the insured value?  For a $1,000,000 building, that’s somewhere between $20,000 and $50,000.
• Do we have a flood insurance policy? Flood is almost always excluded  in the standard property policy.  If your building is on the beach, a loss due to a tidal surge won’t be covered under your property form.  If you’re inland, damage from a creek that flooded due to five days of rain won’t be covered, either.  To get coverage, you’ll need a Flood Policy.

You probably won’t be able to place these coverage when the storm is brewing so, if you’re going to buy it,  now is the time.

I hope that this two step process will help.  However, if you really want that multi-page checklist, then click here for GuideOne’s Emergency Action and Recovery Plan.

In marked contrast to the bellicose approach of Florida officials under Gov. Charlie Crist, Louisiana, in the down insurance market on the southern Coast after Hurricane Katrina, decided on the soft sell. In one way, you could say, Louisiana didn’t have a lot of choice. Unlike a big, populous state such as Florida, Louisiana like most states has little leverage with insurance companies — if it threatens to shut them out or impose onerous or stupid regulations, insurers don’t lose all that much by packing up their suitcases. When you’re the fourth guy off the bench on a basketball team, your threats to quit if you don’t get your way are insufficiently persuasive.

However, reality often has little to do with the course of conduct of politicians and their sort, so Louisiana could have followed the path of Florida.  But it didn’t.  And there are indications that Louisiana’s relatively hands-off approach, combined with a relatively small state subsidy for insurers, is producing positive results for consumers.  This Becky Mowbray story in the Times-Picayune says that private insurers are beginning to buy up policies formerly held by the state-run insurer, the laughably corrupt Citizens Property Insurance Corp., to the point where the state insurer will soon hold less risk than it did before Hurricane Katrina struck.  Although she took deserved heat for her handling of the Katrina aftermath, praise is in order for former Gov. Kathleen Blanco, who backed the softer approach, and to other state officials including Insurance Commissioner Jim Donelon. 

Meanwhile, Florida continues its nostalgia tour, reaching back to the dark ages of economics for inspiration – central planning, price controls, table-pounding tirades and harangues by the state’s highest elected official and many more embarrassing features.

(read more at) Insurance Coverage Blog: Louisiana insurance market recovering, state-run insurer has less risk.

#1.  Increase Your Property Deductible

This week, one of our clients moved from a $500 property deductible to a $5,000 deductible and reduced their annual premium by almost $1,100 (about a 14% decrease overall).  They have about $1.5 million in property insured with an annual total premium is about $8,000 per year.  Now, granted, they have taken on a little more exposure but the trade-off made sense to them.  If they can go four years without a property claim, the move has paid off.

Many churches are reluctant to make this move despite the savings.   The fear is that they could have multiple losses over the next five years and that the change could end up costing them more money than they are saving.  Yes, that could happen.  But look at your church’s claims history.  How many property claims has your church filed in the last 10 years?  How about the last 20 years?

The fact is, most of our church clients don’t file claims.  Either they don’t have them or they have them but don’t report them.  When they do report one, it is usually a big one and the $5,000 that will come out of their pocket is not as significant relative to the  check the insurance company delivers.

The percentage of savings your church will see will depend primarily on the answers to two questions:

• Do you have a separate wind and hail deductible?  If you do, the deductible credit will only impact the property premiums related to the non-wind and hail property perils such as fire and lighting.  We call these “all other perils” (or AOP).  Our church client has a wind and hail deductible so the impact was limited to some degree.  (You can raise your wind and hail deductible, too, but you probably won’t see a large enough premium decrease to justify the additional assumption of  risk your church will be taking.)

• How much of your total church insurance premium is property premium?  Your general liability premium won’t be decreased and neither will crime and inland marine premiums.  The credit will only be applied to the property premium.  So, if you have a larger liability premium than the typical church, the percentage you save won’t be as high as the average church will see.  The church in my example does not operate a day care or school.  If they did then their liability premium would have been a higher percentage of the total premium.  They would have still saved the $1,100 this year, but the percentage saved overall would have only been about 7%.

In general, the larger your property premium, the larger the real dollar savings you will see.  There are other deductible options so talk to your agent and your leaders and see if a change makes good stewardship sense for your church.

There are four big things you need to know to help you prepare for wind losses to your property:

1. A “wind deductible” is not the same thing as a “hurricane deductible”.  A wind deductible applies to all covered losses resulting from wind and hail while a hurricane deductible applies only to hurricane (or, in some cases, “named storm”) related losses.  In other words, a loss resulting from a tornado that hits Jacksonville in May is subject to the same wind deductible as the one used in November when a hurricane rolls through.  In contrast, a “hurricane deductible” won’t be used for the May tornado; the insurer will apply the standard flat deductible instead.  However, the hurricane deductible will be applied on the November hurricane.  Very few companies use a hurricane deductible for commercial property so you probably have a “wind and hail deductible” on your church buildings.  Church owned residential buildings are the frequent exception.
2. Both the wind and hail deductibles are equal to a percentage of the limit of insurance, not the amount of the claim.  This is very important and almost always a surprise to the church.  Suppose you have a 5% wind and hail deductible and a building insured for $1,000,000.  If you have a wind related loss of $300,000 the deductible is not $15,000 (5% of the amount of loss) it will be $50,000 (5% of the $1,000,000 building limit).  Big difference.
3. Unlike the flat property deductible which applies per occurrence, the wind deductible (and the hurricane deductible) usually apply per limit.  For example, if you have three buildings and the contents of those three buildings insured on your policy, you have six limits.  A wind or hail loss involving all the buildings and all the contents of those buildings will result in the application of six different deductibles.
4. Just like the flat deductible, the wind and hail deductibles and hurricane deductibles apply per loss.  So, if three storms hit your property on three different occasions, you will probably see the application of the wind deductible all three times.  (Of course, the insurer has to prove that three storms hit your buildings, something that was hard to do back in 2004.  And yes, the state could step in and refuse to let insurers apply three different deductibles, just like they did in 2004.  But, barring that, the policy language is clear on this application.)

Your church needs to be prepared for a wind loss as it could mean the outlay of serious money to make repairs.  Talk with your leaders, understand the real dollars at stake and come up with a plan for dealing with the wind and hail property loss before it happens.