Church mergers and campus acquisitions have become common as smaller congregations with valuable buildings join larger ones with growing attendance. The insurance work is usually done after the decision, which is the wrong order, because several of the findings should affect the terms.
Before the agreement is signed
Get five years of loss runs on the other congregation
Not a summary, the carrier produced runs. You are acquiring their claims history, and in a merger it generally follows into your experience, which affects your pricing and your workers compensation mod for years.
Ask directly about known circumstances
Not just filed claims, but anything that could become one. Abuse allegations in particular have long tails and claims made coverage will not respond to something that was known and not disclosed.
Establish how prior acts will be handled
Management liability and abuse coverage are frequently written on a claims made basis. When the other congregation's policy ends, claims arising from past conduct have nowhere to go unless prior acts coverage is arranged or tail coverage is purchased. Decide who buys it and write it into the agreement.
Inspect the building properly
Age of roof, electrical, heating and plumbing. Knob and tube wiring. Asbestos and lead in older construction. Underground oil tanks, which are a real environmental liability in New England and frequently unknown to the congregation itself. A building being given to you is not free if it comes with a deferred maintenance bill the insurer will decline to cover.
Evaluating a merger or a building gift?
We will review the loss runs, the building and the prior acts question before you commit, not after. Request a free church risk assessment or call 978.712.0111.
At closing
Confirm the effective date and time of the transfer so there is no gap or overlap in coverage. Add the new location and any new vehicles to your policy effective that moment. Update your statement of values. Notify your carrier in advance rather than afterwards, because a material change in exposure discovered later is a conversation you do not want. And confirm the other congregation's policies are cancelled rather than left to lapse, since an unpaid premium on a dormant policy can produce a collection action against the surviving entity.
After closing
Re examine limits against the combined operation. Two congregations merged generally means more attendance, more staff, more buildings and more programs, and the surviving policy was sized for one of them. Re run the workers compensation classification exercise with the combined payroll. And revisit management liability, since a merged board with new members from both congregations is a governance structure neither policy was underwritten for.
Questions leadership teams ask
We are receiving a building as a gift, not merging. Same issues?
Most of the property questions are identical. The claims history and prior acts questions are usually simpler, but confirm whether you are also taking on the entity rather than just the real estate.
Their loss history is bad. Does that sink the deal?
Not necessarily, but it should be priced in. Knowing before you sign gives you the option to negotiate who carries the cost.
Can we keep their carrier for that location?
Occasionally, briefly, but two carriers on one entity creates allocation disputes. Most churches consolidate at the first renewal.
When should the broker get involved?
At the point the conversation becomes serious, well before the agreement is drafted. Several of these findings belong in the agreement itself.
Not ready for a full review? Start with our church insurance checklist, a short list of the coverages and limits worth confirming on your current policy before you talk to anyone.
If you would like a second opinion on whether your merger and acquisition exposures is properly structured for insurance purposes, contact us for a free church risk assessment.
Contact Hale Street Insurance at 978.712.0111 or [email protected] for a free church insurance review. You can also visit our church insurance page or request a quote to get started.
Jake Lubinski is the founder of Hale Street Insurance and a licensed insurance broker with years of church board and stewardship experience. Based in Boxford, MA he works with churches throughout Massachusetts and the US to build insurance and risk programs designed around how ministry actually operates. Reach Jake at [email protected] or 978.712.0111.
Related reading: Multi-Campus Insurance: One Policy or Several | Multi-Campus Governance and Board Oversight | Valuing Historic Church Structures | Church Building Code Compliance
