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Church Excess Liability Or Umbrella

Three Adult Employees Stand and Smile at the CameraWorkers Compensation seems to be a highly misunderstood issue within the church today. Churches have confused their statutory obligation to carry Workers Compensation with the need to provide protection for the church against the liability they may have for their employees. State Statues simply provide the requirements that mandate whether or not an organization must carry Workers Compensation. In some states all organizations have to carry Workers Compensation coverage. In other states you may be required to have 1, 2, 3, 4, 5 or more employees before it is mandated. However, in all states, if an employee sues you and you do not have Workers Compensation, you do not have protection. In fact, in most instances because you failed to purchase Workers Compensation, whether mandated or not, the courts have upheld that you abdicated your right to defense and you are liable for injuries sustained to the full extent of the law. This type of coverage and protection is specifically excluded from your Special Multi-Peril General Liability form.

This particular coverage has many facets that need to be addressed. The most misunderstood is the definition of what an employee is. By state statues, an employee is anyone that provides services for you under contract or is employed by you. For example, most churches have a pastor and secretary. In addition, they often pay someone to cut the grass, and an organist to play music. All four of these are employees. If you hired somebody to paint your building, and you did not obtain a certificate of insurance from them stating they have Workers Compensation insurance, the individual and all of their employees become your employees. If they are injured, you are responsible.

The Employers Liability form provides coverage for most claims from employees and/or their families or other parties that are not otherwise covered by the Workers Compensation policy. Claims of this nature are excluded from your general liability form i.e.,

  • If an employee is injured and the spouse of the injured were to sue you for loss of consortium, your protection would come under this form.
  • If your janitor modifies a ladder that is used by them or somebody else and it collapses, the ladder manufacturer would most likely be sued.

In all probability, the manufacturer would be held liable in the court environment we have today. However, because your employee modified the ladder, you then became a manufacturer and are subject to lawsuit from the ladder manufacturer for reimbursement or partial reimbursement of the loss. This type of claim is covered only under employers liability.