Insurance is a Matter of Trust

Insurance for churches should not be looked upon as a “necessary evil.” In fact, certain types of insurance, such as workers’ compensation or commercial auto insurance, are required by law when the circumstances warrant. A church that has one employee other than the pastor or that owns or leases a car, bus, or truck will need one or both of those kinds of policies.

In today’s age of Internet shopping, it’s possible to obtain a wide variety of “personal” insurance products without the assistance of an insurance agent. Sadly, the reality is that “do-it-yourself” insurance often leaves a person improperly protected as a result of the overwhelming desire to reduce the cost of insurance.

Doesn’t matter if we’re talking about life insurance, health insurance, or auto and homeowner’s insurance, advertising slogans such as, “Only pay for what you need,” sound inviting. But price is not the only consideration. How do you actually determine “what you need”? Unfortunately, too many insureds discover at the time of a loss that they either didn’t have what they needed, or they didn’t have enough of what they needed. Or they had a deductible they couldn’t cover with savings. A few extra premium dollars can overcome all of those shortcomings.

Consider your auto insurance. Following even a minor at-fault collision with an $85,000 electric vehicle and discovering that “you only have what you paid for” – the minimum required $5,000 property damage coverage – will probably keep you awake at night for months trying to figure out how you’re going to come up with the rest of money needed to pay for the damage.

Churches need to understand that they are businesses, and businesses need commercial insurance – known as property and liability (or casualty) insurance. These types of insurance are not readily available over the Internet in DIY form. General Liability Insurance and Property Insurance policies are highly complex and do not come in a one-size-fits-all format – in fact, they may be separate policies. Insurance for churches is even more specialized than one might think, and while a church could get coverage from an insurance company with “household name recognition,” the better policies will come from insurance companies that have chosen to work specifically with churches.

And this is where the true value of an agent will be discovered. An experienced insurance agent or broker will determine proper limits of protection, the types of coverages needed beyond those in a standard policy form, and the need for any specialized coverage for items of unique value or beyond the coverage limits available in a standard policy. The agent-insured relationship is one of trust and is almost as important as a doctor-patient relationship.

Being invited by another agent or broker to change insurance companies should be viewed with some skepticism. Agents and brokers get paid commissions when they sell an insurance policy. Nothing inherently wrong with that at all. But an agent who “lowballs” an insurance premium just to make a sale and earn a commission can easily leave the insured underinsured or completely unprotected to some extent.

A typical “come on” is an invitation to have “a free policy analysis” performed by an agent you have never met before. By law, no agent can charge for this. And there’s nothing wrong with having the analysis done, but making a decision to change insurance companies based on an analysis that wasn’t your idea to begin with could be a dreadful mistake. An insured should ALWAYS consult his or her existing agent or broker to make sure the “free analysis” was unbiased and, most importantly, accurate before agreeing to make a change. Changing insurance companies, like changing doctors, requires a certain amount of care and caution.

As insureds, churches are not much different than the rest of us as individuals . . . we’re obviously “price conscious” because we have finite resources. But in my more than 25 years of experience as an insurance agent in life, health, disability, and property and casualty insurance, I’ve also learned first-hand that “price is only an issue in the absence of value.” If you have one, your insurance agent probably represents untold value to you. You have someone you trust and should be able to call on for advice or help, someone who can explain the coverage you have and why you need it, and recommend coverage you may not have but also need.

Agents represent insurance companies and they owe their allegiance to the company first, and to the client second; some agents represent only one insurance company, which is neither a positive nor a negative. Brokers represent insureds and have the freedom to seek coverage from one or more companies that will best meet the client’s needs. A broker who places 90% of his business with one insurance company, however, really isn’t much different than an agent who represents just one insurance company.

Like a broker, an independent agent may represent more than one insurance company and he or she has greater latitude to find the most beneficial coverage for a client. The agent or broker who truly takes the time to get to know a client and the client’s insurance needs is far more valuable than an agent who is merely interested in making a sale. The price of a commercial insurance policy is not the best measure of its value; knowing what the policy covers and to what extent is far more important. And the agent or broker who knows his client’s needs will usually make sure all the proper protections are in place and adequately covered.

So, be wary of an unexpected invitation to give a copy of your policy to an agent for a free analysis. The analysis may or may not be in your best interest, especially if it comes with a recommendation to change insurance companies. Giving your existing agent an opportunity to compare your existing coverage to a new quote may identify an actual shortcoming in your coverage, or may reveal that your policy does a better job of protecting the church than a lower-cost proposal. And knowing more about a particular insurance company is always important as well . . . especially if you’ve never heard its name before.

Although I am a licensed property and casualty insurance agent, I do not actively market workers’ compensation or commercial insurance policies. I maintain my “P&C” licenses primarily to be able to help churches, businesses, and individuals understand their existing insurance, any proposed new insurance, and evaluate quotes and coverages to make sure the proper protections are or will be in place. Only a licensed agent or broker can do that. My commercial and workers’ compensation insurance reviews are entirely unbiased and my coverage recommendations are made only in the best interests of an insured. I can’t sell you anything and I’m not compensated in any way . . . I truly have “no skin in the game.”

For more information about your existing commercial insurance coverages, call me at 909.618.4841 or send an email to max@churchandministrycompliance.org