November 7, 2023
By Ryan Sutherland, Colorado Account Executive
There are so many insurance policies to consider when it comes to protecting your ministry, and keeping track of each one’s coverages can be a mind-numbing task. One that I often hear confusion about is the Excess Liability policy, more commonly referred to as an Umbrella. While these terms aren’t exactly interchangeable in the broader insurance world, they do have a lot of overlap. For purposes of understanding your Brotherhood Mutual policy, they are basically synonymous.
Like the name suggests, an umbrella policy provides extra (or “excess”) liability[1] coverages over-the-top of existing coverages that can be shared by multiple policies. This extra coverage functionally increases the limits of the policies that are under the umbrella. Many people confuse it with their other liability policies, thinking that the umbrella is what provides the liability protections they would need if they faced a lawsuit. However, the purpose of the umbrella is simply to increase limits that already exist in your other policies, and it is typically subject to all the conditions and exclusions of the underlying policy or policies.
How do I know if our ministry needs an umbrella policy?
The primary reason for an umbrella liability policy is to protect the ministry and its volunteers/leaders from financial disaster if a major accident or lawsuit were to occur. To determine if you need one, you must consider the potential disastrous exposures of your ministry that could lead to the exhaustion of your underlying policy limits.
Every insurance policy has a per-occurrence limit for each line of coverage. In your Brotherhood Mutual policy, the per occurrence limit applies to a judgment or settlement rendered by a court or arbitration to settle a claim. The legal fees and defense costs associated with a claim are “outside the limits,” which means Brotherhood[2] will pay whatever is necessary to defend you against a claim until your limits are exhausted. The key question, therefore, regarding whether you need an umbrella is: will the per occurrence limit suffice to cover all potential damages awarded to a claimant (or claimants)?
What are the most obvious exposures that might require an umbrella policy?
Each of these questions highlights potential exposures that could result in a claim or multiple claims that could easily exhaust the underlying limits of your policy. If you answered “yes” to any of these questions, then your ministry should consider an umbrella policy. They typically cost around $450 per million of coverage and can go over the top of most of the coverages you already have in your policy. Your agent can help you determine your exposures and how best to get the coverage you need.
[1] An umbrella does not increase or add any additional coverage to your policy’s property limits. It applies to liability coverages only.
[2] This is not the case with all insurance policies, so make sure you understand how your policy covers defense.
[3] Make sure your policy includes Directors and Officers Liability. I see many ministry policies that don’t have this coverage at all.
If your church or nonprofit engages in short-term, summer mission trips, this time often signals the beginning of fundraising projects. Before you appeal for donations, it is important to review the rules of what the IRS calls “deputized fundraising” making sure you have the proper policies and procedures in place to maintain compliance. Failure to maintain compliance could result in the loss of your tax-exempt status.
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Over the last few years, our agency has continued to grow and expand across the Midwest & Rockies, now spanning six states: Nebraska, North Dakota, South Dakota, Kansas, Colorado, and Wyoming. Serving over 3,000 ministries and nonprofit organizations, we are deeply grateful for the opportunity to support you.
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There are so many insurance policies to consider when it comes to protecting your ministry, and keeping track of each one’s coverages can be a mind-numbing task. One that I often hear confusion about is the Excess Liability policy, more commonly referred to as an Umbrella. While these terms aren’t exactly interchangeable in the broader insurance world, they do have a lot of overlap. For purposes of understanding your Brotherhood Mutual policy, they are basically synonymous.
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Let's take a stroll down memory lane to 1938 when General Electric made a groundbreaking move by introducing fluorescent tubes to the world. Even though the technology had been brewing since the late 1880s, it took time and the genius of several inventors to make it shine as a practical product.
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