Costs of insuring Texan churches in the U.S. are on the rise following a wake in natural disasters, leaving many churches vulnerable. An increase in construction costs, and underwriting challenges for the specialized risks involved, are hiking premium costs by tens of thousands of dollars. Some church leaders now face the decision of either going without insurance or cutting back on ministries.
Religion News Service (RNS) highlighted the issue in a comprehensive report, entitled ‘Perfect Storm leads major insurers to drop churches.’
Recent disasters that significantly affected the insurance premiums include the ‘snowmageddon’ big freeze in 2021 and this year's Hurricane Beryl.
Insurance companies such as Church Mutual, GuideOne and Brotherhood Mutual, all specialists offering insurance to churches, reported lower reserve funds after claims following such events. As a result, high-risk church buildings have been dropped, to offset any losses.
Trinity Baptist Church in Mount Pleasant has seen a painful 85 percent hike in insurance costs after the snow storm of Feb. 2021. The Rev. Jeff Julian told RNS the issue started from a frozen pipe in an office within the church building. The pipe burst and caused a lot of flooding damage. It resulted in a large insurance claim to finance the clear-up and refurbishment needed.
The church has used the same insurance provider since the weather event. However, Julian said a notice was recently received from the insurance company informing him that the premium would increase by 85 percent for the year ahead, with renewal due next month, August.
The premium had been $49,800 USD per year, so the church is looking for a better deal.
“An 85 percent increase on that is going to be where we’re starting to have to take away from ministries, probably,” he reportedly said.
Texas is seen as a “weather-related causality zone” and Julian told RNS that he knew of smaller churches ditching insurance to avoid the rocketing increases in premiums.
“It’s tough to hear,” Julian reflected, adding, “the Lord’s got this. …We just need to be faithful and follow His lead.”
Charles Cutler, president of ChurchWest Insurance Services, explained to RNS that the issue for insurers is also that church buildings are open to varying members of society for different uses, and there is “little oversight.” His company works with 4,000 churches and ministries.
“Because of the First Amendment and the separation of church and state, ministries are largely unregulated,” Cutler reportedly said. “And unregulated businesses are difficult to underwrite.”
The effect of the Covid pandemic is another factor, according to Cutler. He pinpointed supply chain shortages for construction materials originating during the worldwide crisis, leading to higher costs in any church building rebuilds deemed necessary. Insurers needed to step up premiums to cover such costs.
Insurance for Texans commented that “Multiple church insurance companies are exiting the Texas market at once” in a June 5 article entitled, ‘Sticker Shock: Understanding the Surge in Texas Church Insurance Rates’.
“The landscape of all property coverage in Texas is in a time turmoil right now due to catastrophic storms that have plagued our great state for the last several years,” it said.
“Unfortunately, church insurance in Texas is undergoing significant changes beyond just that turmoil. Many church insurance providers have exited the Texas market completely… for those companies that do remain, they are issuing fewer policies and tightening their underwriting standards to unprecedented levels.”
The company blamed factors such as natural weather events increasing in severity and occurrence, a burgeoning in population numbers with increased urbanization of the state.
The same RNS report also highlighted other denominations noting that “hundreds” of United Methodist Churches in the Rio Texas Annual Conference lost property insurance last November, “leaving church officials scrambling.”
“More than six months later, some churches have found new insurance, often at a steep increase. Others still have none,” Kevin Reed, president of the conference board of trustees reportedly told RNS.
The conference had been given a month’s notice about the cancellation of property insurance policy, which the churches could “buy into.” It left no time to find new insurance cover before the expiration of the policy and put local churches in a vulnerable position.
“We have not found a good solution,” Reed told RNS. “It continues to be a significant problem for our churches.”
