4 Ways to Protect Church Board Members from Liabilty

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4 Ways to Protect Church Board Members from Liabilty

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Have you considered church liability? Church board members are important to the success of any growing church. Each member has been placed in a position of trust. For this reason, the decisions and operations of a church board may expose board members to personal liability and even a lawsuit.

Here are four steps that you can take to protect your board.

1.Read Your State’s Charitable Immunity Clause.

Some states provide charitable immunity for volunteers, which may include church board members. The purpose of this law is to encourage volunteers and board members to serve by reducing their liability exposure. While the law provides some relief for the negligent acts of volunteers, these laws vary widely from state to state and are often misunderstood. Don’t make the mistake of assuming that your nonprofit will be exempt from liability because its purposes are charitable, or because the person responsible for the harm is a volunteer. Check to see if your state provides charitable immunity and whether its definition of “volunteer” covers church boards.

2.Incorporate Your Church.

When an unincorporated church church incorporates, this means that it has completed the process by which the state recognizes it as a formal legal entity. The state lists the newly formed corporation as an entity doing business in the state as a nonprofit corporation. This allows the church to act in a corporate way and not as a group of individual members. Maintaining a corporate status with your state has the benefit of providing some personal liability protection for your board members and other church leaders. Check with your Secretary of State’s office for information on becoming incorporated and to update your status annually, or as required.

3. Establish Some Formal Rules.
Church bylaws can provide legal protection, as long as you operate by them. If there is a legal dispute, a court may look to the rules established in the bylaws for guidance. In addition, the bylaws should include provisions that indemnify (protect) board members from personal liability for board decisions. An attorney can assist you in amending the language if needed.

4. Obtain directors and officers (DO) insurance.

Church Directors & Officers Liability coverage provides protection for the leadership of the church in regards to the business and financial decisions that they make for the ministry. Directors and Officers Liability Insurance is commonly referred to as D&O insurance. In the event of certain financial damages or lawsuits, D&O insurance will provide legal defense funds and help protect church board members’ personal assets. Even if a board member has done no wrong, if an accuser brings a lawsuit against him or her, he or she must defend it, and defense costs can be expensive and are typically covered under a D&O policy.

Following these four best practices can greatly reduce liability for your board members. The peace of mind that comes along with protecting your board members can help your them as well as other volunteers focus on serving your church and community.

For more information, contact your trusted local insurance agent, Sandi Purinton with The Insurance Connection. We help our clients Live Better. Save More. That’s what we try to help you do at The Insurance Connection. Offering the benefits of an independent agency, The Insurance Connection carefully considers your individual insurance needs and finds the right coverage for the best price for you, all with a smile. Contact us today at 678-439-8757 or sandi@insconnectga.com to get free insurance quotes

Disclaimer: This material is for information only and is not intended to provide legal or professional advice. You are encouraged to consult with your own attorney or other expert consultants for a professional opinion specific to your situation. This information is only a general description of the available coverages and is not a contract. In an effort to keep your policy coverage affordable, the actual policy contains certain limitations and exclusions. Please refer to your insurance policy for the pertinent contract language and coverages. Some coverages and discounts are not available in all states. The Insurance Connection welcomes all applications, without regard to religion, race, color, national origin, sex, handicap or familial status.

By |2017-01-17T09:28:22+00:00November 23rd, 2016|Church Insurance, Insurances|0 Comments

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