For many churches, insurance coverage can be an afterthought. But what if your church building caught fire? Do you know the out-of-pocket expenses you’d have to pay in order to rebuild? An overlooked part of many insurance plans is the deductibles in your policies.
In this blog, we will answer this question by going over the different types of church insurance deductibles. As well as some helpful tips for determining what deductible is best for your church.
What Is A Deductible?
It’s the amount of money your church will pay out of pocket for a claim. You can typically choose a deductible between $1,000 and $100,000 or higher.
If you need to file a claim, your church insurance company will pay for damages based on the policy limits and deductibles you’ve chosen. Deductibles should be unique to each church; you’ll want to tailor your choices to the best fit for your organization.
Are There Different Types of Deductibles?
Short answer: yes. Your insurance policy likely has deductibles associated with four different coverages including:
- Commercial Auto
Most people are familiar with property insurance deductibles but it’s important not to overlook other areas of your commercial insurance policy.
#1 Property Insurance Deductible
A property insurance deductible applies to anything you own or rent. This includes:
- Church Building
- Personal contents like tables, chairs, and worship bibles
- Building glass including stained glass
- Leased equipment like printers and copiers
- Maintenance equipment like lawnmowers
$2,500 – $10,000
Property insurance deductibles will have the biggest impact on your insurance premiums. If your church has strong financials and a healthy cash reserve, it could be beneficial to increase your deductible. A typical range is $2,500-$10,000 but it’s not uncommon to have $25,000 or higher.
#2 Liability Insurance Deductible
Liability insurance works a little differently than other types of insurance; your policy might have a deductible, a self-insured retention limit, or it might have both. At first glance, they may seem very similar, but there are differences to understand. A deductible and self-insured retention affect your out-of-pocket expenses and coverage limits.
Deductible vs. Self-Insured Retention (SIR)
|Out of Pocket Costs:||Yes||Yes|
|Who Pays First:||Insurance Company||You|
|Coverage Limit:||Reduced by Deductible||Not Affected|
Liability Coverage With A Deductible or SIR
- Directors & Officers
- Employee Benefits Liability
- Employment Practices
- Legal Defense Reimbursement
- Umbrella Insurance
Choosing Your Deductible Or SIR
When choosing deductibles and SIRs for your church liability insurance, you want to be sure you have an accurate picture of your financial health. Consider reaching out to your church insurance agent and asking what impact a higher liability deductible could have on your premiums.
$5,000 – $10,000
Church insurance companies like to see higher deductibles on liability coverage, and your organization will have favorable premiums if you’re able to increase deductibles over time.
A great way for religious organizations to protect themselves from large liability claims is to keep their bylaws up to date and follow them.
#3 Crime Insurance Deductible
Your church crime insurance likely includes multiple coverages that all carry separate deductibles. Depending on the insurance company, you may see the following in your insurance coverage:
- Theft, damage, or destruction of money or securities
- Financial forgery or alterations
- Employee dishonesty or embezzlement
Crime deductibles don’t usually have a big impact on insurance premiums, most of our churches have $500 or less deductible. If your organization’s crime limit is below $50,000 a year, you should consider a deductible of $500.
#4 Commercial Auto Deductible
Religious organizations usually have two types of deductibles for commercial auto insurance:
- Comprehensive (Theft coverage)
- Collision (Colliding with another vehicle)
The newer your church vehicle the more your deductible will impact the premium. Church vehicles five years or newer will see the most premium savings by selecting higher deductibles.
How To Determine Your Deductibles
Start by asking yourself this questions: How much could we afford to pay out of pocket for an insurance claim?
Reasons To Consider Raising Your Deductibles
- Save premiums, and invest those savings in other areas of your ministry like an emergency fund.
- Helps avoid small claims, which avoids premium increases or a higher chance of policy cancelation
- Helps focus on risk management and keeping your facilities, members, and employees safe
It’s always important to find the right balance of savings and risk – especially when it comes to choosing your deductible. We’re here to help you explore the options and find the right deductible for your insurance policies.