Editor's note: This is an expanded version of the "Reducing Risk" article that appeared on pages 48 and 49 in the July/August 2007 issue of Rev! Magazine. (To subscribe to Rev!, go to www.rev.org/magazine/sc.asp.)

In the not-too-distant past, it would have been unthinkable to file lawsuits against churches. That era has obviously disappeared into the sands of time. Today's litigious environment requires pastors to pay attention to the risks involved in ministry.

Church insurance companies are acutely aware of the trends in this area. Rev! asked three top insurance executives to share what every pastor needs to know about reducing ministry risks. Randy Bradner is vice president of underwriting and risk management for Church Mutual Insurance, Mark Robison is president and CEO of Brotherhood Mutual Insurance, and Jim Wallace is president and CEO of GuideOne Insurance.

What trends do you see in risk management that pastors need to be aware of?

Wallace: One of the most alarming trends -- and it's been well publicized in the media -- is the soaring number of lawsuits against churches in America. One area where we're seeing more lawsuits than in the past is in employment-related claims, such as wrongful termination or discrimination complaints filed by former employees of the church.

Another new issue that churches are facing is how to respond to registered sex offenders who are attending their services. With the proliferation of public access to state sex offender registries, the issue often comes to light when a congregation member finds that another member (or attendee) is listed on the registry and comes to the church leadership for a response. Even 10 years ago, churches weren't faced with responding to such a situation.

Because of these changes, we believe it is critical for churches to establish risk management policies and procedures that help minimize exposure to lawsuits. Churches also should consider purchasing an umbrella policy for an additional layer of liability protection.

Bradner: From a liability perspective, completing background checks on all employees (current and new) and volunteers with regular access to the premises or to youth is important to identify potential problems before claims can occur…Establishing a risk management committee within the church can be very effective. The committee has access to significant resources to assist in identifying and mitigating loss hazards…States have taken different approaches to 15-passenger van safety. Seek legal counsel to keep abreast of state statutes with regard to compliance with licensing and operating requirements.

Robison: We're seeing more churches send individuals and groups off the church property to reach people who are hurting or in spiritual need. Countless churches from across the nation are sending teams of people, often unskilled, to assist with the cleanup and rebuilding efforts along the Gulf Coast. Planning and adequate supervision by skilled team leaders is an essential requirement for this type of ministry.

Youth leaders are looking for innovative ways to appeal to young people. High adventure/high risk activities are more common… Good accountability loops should be set in place whereby more experienced leaders meet with and confirm the soundness and the risk factors of less-experienced leaders' ministry plans, before these plans are set in motion… Effective churches are reaching out to all segments of the culture, resulting in ministry activities with new legal perils. Ministry to convicted pedophiles, infants with AIDS, and illegal immigrants are examples of ministry groups that the church has never targeted or served before.

Short-term foreign mission trips are becoming more common in churches with a Great Commission mindset. There are serious insurance coverage and foreign travel issues that must be understood and managed to get these teams out of the country and safely back again.

With increased concern about sexual misconduct in churches, what liability issues do churches need to be aware of?

Wallace: An alleged incident of sexual misconduct and a subsequent lawsuit are nightmares that can devastate a church emotionally and financially. Fortunately, many cases of sexual misconduct can be prevented with the proper risk management procedures. But if a lawsuit is filed against your church for sexual misconduct, the plaintiff's lawyer will usually try to prove the church is legally liable for two reasons: negligent selection and/or negligent supervision. As the terms imply, negligent selection occurs if the church failed to act responsibly and with due care in selecting the employees or volunteers who interact with minors. If the church doesn't provide sufficient care in supervising the staff or volunteers who work with children, it can be viewed as negligent supervision.

To better safeguard children and to minimize the appearance of negligence, we're urging churches to carefully screen all employees and volunteers who will interact with minors. This screening should include criminal background searches. We also recommend a six-month waiting period before allowing anyone to work with minors. In addition, the church should establish risk management measures to ensure proper supervision of all activities involving minors. One such technique is to employ the "two-adult rule," which requires two unrelated adults to be present with children and youth at all times.

Bradner: Background checks are essential. Establish procedures to complete background checks and follow the procedures. If not already in place, create an employee/volunteer manual and a harassment policy.

Robison: Allegations that involve sexual misconduct will become media events. The reputation of churches that have no screening and supervision programs in place will be tarnished for years to come. If you were the parents of children or teens, would you want to attend a church where incidents or allegations of misconduct have occurred or been reported? Churches that make a strong effort to protect kids will draw families because a caring attitude is demonstrated and real. All the church specialist insurance companies offer resources to help churches develop effective screening and supervision programs.

What are some of the most common facility concerns that you run into when providing quotes for insurance?

Wallace: Every church building or campus is unique and there are many factors that we look at when developing insurance quotes, such as the facility's size, age, value, location and type of construction. In general the most common facility concerns that we see include: fall hazards in places such as inadequately maintained or lit parking lots, sidewalks, and entryways; fire hazards such as the storage of combustibles (like holiday decorations) near heat sources; playground hazards such as inadequate fall surfaces and dangerous equipment; old, leaking, or damaged roofs; aging or poorly maintained electrical systems; boilers and HVAC systems that haven't been inspected or regularly maintained; and the lack of fire sprinkler systems.

Bradner: Church facilities are being used more than ever by people unfamiliar with the premises. We're seeing a growing need to pay particular attention to maintenance issues to prevent slips and falls. Proper lighting in all areas, both inside and outside, is essential. Stairs, carpet and other flooring, handrails, and exterior surfaces require special attention. Access to the facility should be limited to intended areas.

Robison: From a property perspective -- a formal building maintenance program is best. A professional facilities management program should be developed and include a formal, written (preferably software based), preventive maintenance agenda. The program should address: roof, flashing, gutters, and downspout reviews; systems maintenance for electrical, heating, plumbing, sprinklers, and other systems by experts who understand the maintenance of these systems; playground maintenance and care; monitoring and maintenance of all walking surfaces; stairway railing checks; checks to ensure the building is secure (windows and doors) after all ministry activities; checks to ensure that all emergency lighting works and that exit doors are unlocked and accessible during all services.

What questions aren't you hearing from churches that you think they should be asking?

Wallace: Although a growing number of church leaders recognize the importance of risk management, we'd like to hear more pastors, church administrators, and boards asking us how they can improve safety and security, while minimizing exposures to lawsuits. The answer to that question and the best way to begin is by forming a church safety and security team. This team will be responsible for establishing a risk management program for the church. By utilizing volunteers for the team and readily available risk management resources, the process can be started quickly and inexpensively.

Bradner: Questions about insurance on antiques and other rare and valuable items are seldom asked. A good example is stained glass. Some of the glass in the older churches can be worth hundreds of thousands of dollars. Statuary, works of art, and religious artifacts should also be given attention.

In light of what happened during 2005, depending on the part of the country the church is located in, pastors should also be asking about insurance for both floods and earthquakes. Many insurance policies do not provide coverage for these two natural disasters. In this high-tech world we live in, it's also a good idea to be aware of potential damage to computer hardware. Unauthorized access to or use of church software can also lead to real problems. Insurance coverage is available to protect against such losses.

Robison: Here are three questions we'd like to hear more often: (1) How can my insurance agent and insurance company help us do innovative ministry safely? (2) Hey, we're doing something new (construction activity or ministry), did anyone think to call our insurance agent to make sure we're protected for this new activity? (3) Is my insurance agent involved in various church ministries and does he or she understand what's required to help me do ministry safely?

Churches tend to be very "bottom line" in terms of shopping for insurance based on the cost of the premium. What other issues or questions should be discussed when looking for a church policy?

Wallace: We recognize that most churches have limited budgets, so we understand the desire to minimize premium costs. However, when shopping for a church policy, do not focus on price alone, because the most inexpensive policy may not provide your church with adequate protection. As an example, if your church is not insured for its actual replacement value, the premium will be less. But what if your church burns to the ground? Your congregation could be short hundreds of thousands of dollars to rebuild the facility. The same is true of liability coverage for your ministries. If your church is sued for $1 million or more -- which is increasingly common -- you need at least $1 million in liability coverage. Therefore, be sure to ask about and compare specific levels of coverage to determine if they are sufficient.

Also, inquire about the agent's experience with churches and the track record of the insurance company that he or she represents. To get knowledgeable recommendations and proper coverage levels, we feel it's best to work with an agent and carrier that specialize in church protection.

Finally, if you're looking for ways to reduce your premium, instead of cutting back on coverage to economize, ask about raising your church's deductible amount to a higher level.

Bradner: Select a company that is financially reliable, service-oriented and familiar with the special needs of religious organizations. One of the best indicators of financial stability in the insurance industry is the rating assigned by A.M. Best Company -- an independent analyst in existence since 1899. For example, Church Mutual has been rated A+ for the past 54 years. As far as service, consult your fellow pastors about which company they're with and how their experience with that company has been. While there are many insurance companies who deal in anything and everything, you should look for one that does the lion's share of its business with churches and their congregations.

Robison: Purchasing specialized insurance based on the lowest price is not the best way to get the most value or protection. Churches should purchase coverage that protects their own unique exposures, not those of hardware stores and bookstores. This means churches should look for a policy that has been developed specifically for them.

The church specialist companies have developed insurance policies based on the special needs of churches and related ministries. These coverage enhancements should include religious communications, membership emotional injury, sexual acts liability, and directors and officers liability, among others.

The best strategy church leaders can follow is to find an independent agent who specializes in church insurance and let that agent help the church purchase the right kinds of insurance within the budget the church can afford.

Anything else we should know (that these questions might not have addressed)?

Wallace: Just one final thought. Even though the concept of risk management may seem somewhat out of place in a religious setting, we like to remind churches that risk management is really about good stewardship and safeguarding the people and property that God has entrusted to the church. If risk management is supported by church leaders and programs are properly implemented, safety and security measures can be woven seamlessly into the culture and ministries of the church. Unfortunately, we now live in a world where anything is possible, so the need for risk management has never been greater.

Bradner: Insurance to value continues to be a primary concern. Too often we see churches with property insurance coverage limits woefully inadequate to replace their building and personal property should a major loss occur.

Robison: At Brotherhood Mutual, we think the key to successfully managing your church insurance program is by working with an independent agent who specializes in ministry insurance.

For more information on risk management, safety, security, free newsletters, sample forms, and other materials offered by the companies represented in this interview, go to:

Guide One: www.guideone.com
Church Mutual: www.churchmutual.com
Brotherhood Mutual: www.brotherhoodmutual.com