Sharing space with other organizations and ministries is a great way to extend your relationship with the community, provide assistance to those in need, and perhaps generate some additional revenue or resources. Doing so may also introduce new insurance exposures for your church to deal with.
Property of others. Most policies contain an exclusion for the property of others in your care, custody, and control. So, when the once vacant garage burns to the ground while filled with someone else’s stuff … there will not be much property coverage under the church’s policy.
Pollution. If something in that storage area is a hazardous material, it could create a coverage issue for you or make your risk more difficult to cover. A spill may be covered by their liability insurance, but this is still a new exposure for your church.
Liability Coverage:
Make sure that the liability coverage in place is a minimum of $1,000,000 per occurrence.
For any coverage provided by a third party, make sure that the church is listed as an Additional Insured 100% of the time.
This will ensure that your coverage is adequate and that the third party’s policy will be the first to respond in the event of a claim related to the leased or rented area.
Lessors Risk. When a lease is in place for outside use of your premises, the underwriter will add an additional charge to the general liability coverage for lessor’s risk. This coverage provides protection in the event a tenant makes a claim against you for damage to their property or personal injury.
General Increase in Risk. Having additional traffic from people not related to the church can create additional hazards not normally associated with a house of worship. This may require additional steps to secure your property and to ensure that you are adequately protected against these new exposures.
You should factor the increased cost of insurance coverage into the decision to rent or lease space. The added revenue should easily offset the cost of coverage and prevent a large loss in the event of damage to property or if someone is injured.
This article was originally published by United Methodist Insurance Program