To obtain or renew insurance coverage , a church or ministry must fill out an application . In the last year , many church leaders have noticed a growing number of questions related to sexual abuse risk : questions related to screening processes , background checks ( depth of search and frequency of renewal ), training for staff members and volunteers , and more . If you haven ’ t seen these questions ... you will . Church leaders are learning that premiums are increasing and automatic renewal of sexual abuse coverage is not a given . Why are insurance applications focused so heavily on sexual abuse prevention and why are premiums rising ? The number of sexual abuse claims has skyrocketed , and the cost to resolve these claims has increased sharply ... and there is no indication that either will subside . Case in point : the Boys Scouts of America plans to pay out $ 850 million ; the bankruptcy filing kept the amount that low . For insurance carriers to continue providing coverage to child-serving organizations — including churches — child-serving organizations MUST take the necessary steps to protect children , thereby mitigating risk .
IMPLEMENT A CHILD SAFETY SYSTEM Where child sexual abuse is concerned , a ministry ’ s primary motivation should be the protection of children . At the same time , simple availability of insurance coverage may provide a significant motivation for a church or ministry to implement an effective safety system addressing sexual abuse risk . MinistrySafe advocates the use of a 5-Part Safety System , including : 1 ) Sexual Abuse Awareness Training ; 2 ) Skillful Screening Processes ; 3 ) Appropriate Criminal Background Checks ; 4 ) Tailored Policies & Procedures ; and 5 ) Systems for Monitoring and Oversight .
A claim was reported during the policy period for a sexual abuse incident that occurred on February 5 , 2020 . In this example , the abuse claim was covered under the policy .
In many cases , however , sexual abuse allegations are not immediately reported . Often the incident of sexual abuse took place years or even decades before disclosure . If , in the aforementioned example , a sexual abuse incident occurred in 2017 but was reported in 2020 , the sexual abuse incident will not be covered by the 2017 or the 2020 claims-made policy because the abuse occurrence and report did not occur within the same policy period . A claims-made form of coverage is most valuable when the types of claims associated with a particular organization are immediately known and are generally brought to the organization ’ s attention in short order ( i . e ., vehicle accidents , slip-and-falls ). Claims-made policies in the context of child sexual abuse are not advisable , given the time that often elapses between incident and report .
Occurrence Policy An occurrence policy covers incidents that occur during the specific policy period , regardless of when the allegation is reported to the carrier . Keep in mind : under the terms of any policy , the church is required to report facts that could give rise to a claim ; failure to do so can result in a denial of coverage .
To learn more about the MinistrySafe 5-Part Safety System , visit www . MinistrySafe . com or download the Stop Sexual Abuse e-book at www . churchexecutive . com / ebooks # risk-management .
CLAIMS MADE vs . OCCURRENCE When renewing coverage for child sexual abuse , ministry leaders must understand the difference between a ‘ claims-made ’ policy and an ‘ occurrence ’ policy . Understanding the difference between the two types of policies — claims-made and occurrence — can help avoid coverage gaps , particularly when changing from one form to another .
Claims-Made Policy The claims-made policy covers incidents that occur after a policy ' s start date and are reported to the carrier during the active policy period . A church may negotiate for a short ‘ retroactive period ’ that precedes the start date of the policy , and an ‘ extended reporting period ’ that would add an additional amount of time in which a claim can be reported to the carrier , and therefore be covered . Claims through this form of coverage must meet both criteria for coverage to occur .
Case Study : A church purchased child sexual abuse coverage through a general liability policy on a claims-made basis year after year since 2010 . The 2020 policy was effective from January 1 , 2020 through December 31 , 2020 .
Case Study : A church purchased child sexual abuse coverage through a general liability policy on an occurrence basis year after year since 2010 . A claim was reported in June 2021 related to an abuse incident occurring on November 20 , 2016 . In this example , the sexual abuse claim was covered under the 2016 policy , even though it was reported in 2021 .
Best Practice : When renewing coverage — be sensitive to ‘ term changes ’ or ‘ form changes ’; subtle changes in words or phrases can be significant . One recent circumstance involved a church whose carrier agreed to keep the premiums and the limits the same ($ 1 million /$ 3 million ) — with one small change : the policy was modified from ‘ occurrence ’ to ‘ claims made ’. The policy period began on January 1 , 2021 . In 2021 , the church will receive coverage for historical allegations through the past occurrence form coverages . In addition , the church will receive coverage for all allegations that occur and are reported to the carrier within the policy period ( 2021 ). Any future insurance coverage will conceivably create a gap in coverage . For 2022 , the church will either buy an occurrence form policy or another claims-made policy . Either way , any incident of child sexual abuse in 2021 that is reported in any year other than 2021 will receive no coverage . Of course , the church may be able to purchase an ‘ extended reporting period ’ ( allowing the claim to be reported after the policy period ), but these are sold at the sole discretion of the insurance carrier and usually involve months of extension , not years . In the future , this church will experience a gap in coverage for child sexual abuse incidents that occurred in 2021 .
42 CHURCH EXECUTIVE • STOP CHILD SEXUAL ABUSE churchexecutive . com