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Interview with James F. Cobble and Richard R. Hammar

Risk Management–What The Church Must Do To Protect Itself


James F. Cobble

Richard R. Hammar

Managing risk in the local church is no longer an option. The church has been and will continue to be the subject of major litigation. Though the primary duty of the pastor is to teach and proclaim the timeless truths of God’s Word, he is also obligated to protect the vulnerable and the innocent who have been entrusted to his care.

James F. Cobble, Ph.D., executive director of Christian Ministry Resources, and Richard R. Hammar, J.D., LL.M., CPA, legal counsel for The General Council of the Assemblies of God, recently spoke with Richard Schoonover, associate editor of Enrichment journal, about risk management and what the church must do to protect itself now and in the future.

Define Risk Management

Cobble: Risk management is the process to reduce risks that hurt people, damage property, and harm ministry. Our concern is to enable churches to fulfill their mission in a way that reflects these issues of protecting people and protecting the assets God has entrusted to their care.

Hammar: At the outset, let me say that churches are not required to do anything; they have a choice. But there are proven strategies they can employ to manage risk when it comes to personnel, property, and finances.

In What Ways Can a Church Manage Its Risks?

Cobble: One of the greatest misunderstandings among church leaders is equating insurance with managing risk. Insurance is a form of risk financing and only comes into play if a problem happens. The principal focus of risk management is first to prevent risks from occurring, which has nothing to do with insurance. So churches have the responsibility to take initiative to prevent risks, whether someone is hurt or property is damaged by tornadoes, hurricanes, or fires, or a church is sued because it has been negligent. If the church cannot prevent those risks from occurring, it then must try to limit the impact of that damage. Insurance then comes into play. But for church leaders to think they have managed risks because they have insurance is simply false.

Elaborate on Some of the Risks in Managing Staff.

Hammar: Our research indicates that employment-related disputes are the number one cause of church litigation today. That is a significant risk. A lot of church leaders simply are not aware of this and they get sued.

I spoke recently with a pastor whose church received a complaint in the mail from a former employee alleging disability discrimination, and they found that their insurance policy does not cover this. Most church insurance policies do not cover employment practices, so that means the church has to retain and pay for its own attorney and for any settlement or judgment involved in that case. That can be very expensive. If that is an uninsured risk, that is a significant issue and underscores the need for church leaders to take risk management seriously.

Cobble: There are also other kinds of risks that a church may not think about. For example, what happens if the pastor has a heart attack and is suddenly incapacitated? What if he or she is going to be incapacitated for an extended period, and the church wants to provide help to the pastor’s family, but they haven’t planned in advance for this situation? They may have limited finances available to help and suddenly there can be feelings of tension, guilt, uncertainty, not knowing what to do.

Recently I was aware of a case where a youth pastor was playing soccer with the youth group and tore a ligament in his knee. That resulted in a workmen’s compensation claim. Many churches don’t carry workmen’s compensation for their pastoral staff. So what happens in that situation? Those risks can have liability dimensions, but they also have a human dimension that is grounded in what it means to love and care for the staff within that church.

Many Churches Have Not Thought Through the Entire Picture of Risk Management. How Would a Church Go About Developing a Risk-Management Policy?

Cobble: Most churches find the language of risk management foreign to their daily routines. They don’t use concepts like risk management, and they don’t deal with the insurance concerns and legal concerns. In fact, when you start talking about risk management, church leaders may have little or no interest in the topic. It may be because they view risk management as a business issue, something secondary to their purpose and mission. But pastors need to understand that, while the language of risk management may be foreign, the practice of risk management is at the heart of the gospel. It has its origins in Genesis and the Creation story, where God entrusted to us, His creation in His image, the stewardship of that creation. So caring for property and caring for our environment and ultimately the love and care that is to occur for one another are at the heart of our biblical heritage.

Rather than focusing on having a risk-management policy, a church needs to focus on having a risk-managemtn strategy.

—Cobble

The image of the shepherd, which is prominent in the Old Testament and which Jesus adopted for himself, is the image of risk management within the life of the church. It is recognizing that risks exist, just as Jesus said that the thief comes to kill, steal, and destroy. There is a thief that will do harm, and the will of the Shepherd is to provide care, provide love, and provide comfort to those who are entrusted to the Shepherd’s care.

So when we talk about policies, it needs to be put within this broader context of understanding the essence of what it is. Policies can have a positive benefit in some areas and a negative one in others. Rich and I both agree that the issue of whether a church has a policy is far less important that if it has a commitment to provide care. How that actually unfolds can take many different forms.

Rather than focusing on having a risk-management policy, a church needs to focus on having a risk-management strategy. These are two very different things.

For most of us, a policy is a specific set of guidelines that give detailed instructions about what we are to do in specific circumstances. That is going to kill risk management in most cases, because it’s going to become something that collects dust in a filing cabinet. What churches need to have is a strategy that is intentional in nature, one that is grounded in a specific commitment that arises from church leaders engaging in what we call loving care.

Second, the risk-management strategy must be systematic, meaning it must cover all aspects of the church’s life and ministry. It must be regularly addressed on a seasonal basis; for example, fire is more likely to occur during the cold months. It can’t just be the commitment of a single person who is a champion of that cause, because when that person leaves, the program crumbles.

So a risk-management strategy is grounded in a commitment that is intentional in nature, systematic in its application, and sustained over time.

You Mentioned that Some Insurance Policies do not Cover Certain Risks. What does a Church Need to Look for in its Insurance Policy?

Hammar: Churches need to focus on the exclusions that are set forth in the insurance policy. That document is typically not read or carefully studied in most churches. Most church leaders make certain general assumptions about what may or may not be covered, but really it’s not common for church leaders, pastors, or board members to thoroughly review their insurance policy to see what is covered or what is not or what the limits of coverage are. Most pastors would be surprised to find that the number one basis for church litigation today is not covered under their insurance policy.

Most pastors would be surprised to find that the number one basis for church litigation today is not covered under their insurance policy.

—Hammar

Cobble: The typical church needs to recognize that there are at least five insurance coverages that are important. Chances are they will have three of these five.

Almost every church is going to have property insurance. The leaders need to sit down with their insurance agent and understand what the exclusions of that property insurance coverage are and what the limitations are.

Second, they are going to have liability insurance, but there are many exclusions on the liability insurance side and there are also limits to the coverage. What churches need to be concerned about with liability insurance is that they can have claims that exceed the amount of the coverage they have. For example, a claim of sexual misconduct can easily exceed the coverage today, because the coverage can be very limited or not even covered at all.

The third type of coverage the typical church will have is automobile insurance. Again, leaders need to understand whether or not that coverage is provided for non-owned church vehicles or rented or leased vehicles, because churches often use vehicles belonging to church members and also leased vehicles.

Churches need to look at whether or not they have workmen’s compensation and whether they have an umbrella insurance policy. The purpose of umbrella insurance is to provide additional liability coverages that go beyond the other liability issues.

Hammar: These coverages Jim just mentioned may be endorsements or riders on an existing policy, or they may be separate policies. A good place to start is by contacting your insurance agent to determine if these additional coverages are available from that company. If not, see what recommendations the agent would have to obtain things like employment practices coverage.

Directors and officers coverage provides coverage for board members in the event they are sued. It is common today for board members to be sued, to be listed as defendants along with the church whenever there is church litigation. Directors and officers should assume that, if their church is sued, they are going to be listed separately as individual defendants. Directors and officers insurance will provide some protection against those claims for covered claims and for up to the limits of the policy; also D and O policies often will cover risks that the general liability policy does not. For example, in some cases, they may actually cover employment practices. I recommend that church leaders consider D and O coverage.

A church should consider insurance against theft or financial misconduct. A church should definitely consider coverage for extraterritorial trips. Most insurance policies have what is called an extraterritorial exclusion, meaning there is no insurance coverage for injuries that occur outside of the United States. A youth group goes to Mexico or Guatemala or Africa, and somebody is injured on that trip. The church assumes its general liability policy is going to cover that; in most cases, that is not true. Those are some of the additional issues church leaders should consider along with the fundamental issue of what the coverage limits should be.

Cobble: There is another issue churches need to consider.Many churches have their property undervalued and may take the view, "We’ve got insurance coverage and our premium will only go up if the value of the property is increased." What they fail to recognize is that there are other factors that come into play that can result in serious financial losses if the building is not adequately covered.

Also on the topic of insurance: Many churches have musicians who leave their personal instruments at the church—an electric piano, drums, guitars, amplifiers, microphones. It’s important that the church check with the insurance agent to see if that type of personal property is covered, because those things are often targeted for theft.

Another area a church should look at is builders risk insurance, if they are going into a building program. Whenever a church is in construction, there are many issues related to liability. One is whether a church gets left with bills it thinks have been paid, and it turns out the subcontractors haven’t been paid.

If a church is in a flood zone, the leaders need to understand that the only place to get insurance is through the Federal Emergency Management Association. This issue needs to be addressed with the church’s insurance agent.

What Kind of Insurance Would a Pastor Who Does Counseling Need?

Hammar: That is often included within the standard general liability policy. Counseling issues need to be carefully reviewed in the policy, because that is a very significant risk both for actual incidents of misconduct involving counselees and for false accusations made against pastors. Defense costs in these cases can be very significant.

Why Do Some Churches Resist Screening Workers When They Know They Are Putting Themselves Under a Legal Risk if They Don’t?

Hammar: Probably the number one reason is a concern by church leaders that it’s hard to attract volunteers, especially in youth and children’s ministries; and, if the bar is raised higher through some type of screening, it’s going to make it all the more difficult to recruit workers. That is a misguided view, because what is happening in this country is that anybody who is going to work with children in any secular program—whether it is with Scouts, Big Brothers, Boys Clubs, YMCA, coaching, teaching—is going to go through a screening procedure. Most adults today would find it strange and disconcerting when they apply to work in a church with youth and are not screened.

Cobble: Community standards are changing. Churches weren’t that different in their practices from other organizations 20 years ago, because few organizations did screening. My 22-year-old daughter has already gone through two criminal records checks in jobs she’s had. One was working with the YMCA and one when she was in college doing fieldwork at a hospital.

Children are just as likely to be molested in a small town as they are in a big town. It's not a question of geography.

—Cobble

Here is the unique concern that church leaders need to understand: While community standards are changing and practices are changing in schools, in the YMCA, Boy Scouts, Big Brothers, Little League, and other organizations that work with youth, churches still are lagging behind in screening volunteers. About 78 percent of churches screen paid employees and that’s up from about 48 percent a decade ago, but there has been very little movement on screening volunteers. About one church in three makes any attempt to screen volunteers. They must recognize that in the light of today’s environment and the publicity this issue has received in the media, no group of citizens on a jury would look favorably upon any rationale that a church could give to explain why it didn’t engage in screening. The church’s reasons might be: "It was inconvenient"; "We were afraid it would cost too much"; "We didn’t think that it could ever happen here"; "We trust the people we work with." Those reasons are not going to cut it.

Hammar: Or, "It’s hard enough to recruit volunteers"; or "We’ve never had a problem"; or "The molestation of a child could never happen in our church"; or "It’s too much of a hassle."

Cobble: In the county in which I live, we interviewed the director of volunteers for the local school district. They had 30,000 volunteers, and they screened each one. That is the type of person who would be put on a witness stand. In the church that has several hundred people with maybe 30 to 40 volunteers that are working with youth, the issue is: Do we really care about these kids? The standard within the legal system is reasonable care. That is all we are asked to achieve. Get together 12 people—our neighbors, those we work with, people we see in the grocery store—and all they are asked is, "Did this group of leaders in this church act reasonably?" That is a low standard, and the church should not accept that standard. Our standard should not be reasonable care. Our standard should be loving care.

How Does a Pastor in a Small, Rural Community Where Most in the Church Have Known Each Other for a Long Time Start Screening Workers, Including Those They Already Have?

Cobble: Good question. We need to recognize that church size, church location, and ethnic factors all impact how churches respond to these concerns. In small, rural communities, our research indicates they are less likely to have lawsuits than those, for example, in a suburban or urban setting. And much of it has to do with the kinds of relationships you described. But what we need to ask ourselves is: Is it optional to engage in love? Is it optional to take the commandments that are given to us in the Bible to love our neighbor and to say we will choose when and where this should apply? Or do we recognize that because of the difficulty of a particular task or challenge that, nevertheless out of a sense of discipleship and commitment and faithfulness to God’s calling, we respond to these concerns. So, the small church is going to reflect a different set of challenges and reactions, but it doesn’t diminish the significance of screening workers. Children are just as likely to be molested in a small town as they are in a big town. It’s not a question of geography; it’s not a question of a person’s education or profession. This risk permeates our society geographically, ethnically, and economically. So, the question is, What can the person do? And one of the important first steps is to build support from within the congregation and the leadership.

While leaders may be hesitant to engage in some of these practices because of the reasons we’ve given earlier, parents view it quite differently. They want safe environments for their children. The biggest obstacle the small church has to overcome is the belief: No one here would do this, because we know everybody. But it’s a question of providing a model and being faithful to our calling.

Hammar: The incentive to screen is clearly diminished in a smaller church, especially in a rural community where people seem to know one another. But that can be a false sense of confidence, because small congregations are not immune. There have been cases where churches have been sued for substantial damages because of molestation by a worker who was hired without screening because the pastor knew him or her. So again, the question we need to ask is: To what extent do church leaders want to protect their congregations? That gets back not just to legal, but theological and biblical concerns. Ultimately rooted in the word pastor is shepherd whose primary duty is to protect the vulnerable and the innocent.

Most insurance policies have what is called an extraterritiorial exclusion, meaning there is no insurance coverage for injuries that occur outside of the United States.

—Hammar

Cobble: We need to think about this issue in a better context. When we focus just on the issue of screening, it can generate a lot of emotional responses. But when we think of providing the kind of care that we described earlier that comes from that image of being shepherd, small-town churches are more vulnerable, for example, to fires, theft, and vandalism than are churches in some other settings. And so if the church makes a commitment to engage in risk management, it’s a broad comprehensive commitment to have a strategy more than a policy. One aspect of that strategy is that we’re not only going to deal with the issue of screening workers; we’re also going to deal with the issue of transporting kids. We’re going to deal with the issue of providing protection for our buildings in case of fire or some natural disaster. So, when people embrace the concept of caring for all those that have been entrusted to their care and being good stewards of that which God has entrusted to their care, we find it easier to address specific issues that may meet resistance once that broader commitment is in place.

What Are Some Steps a Pastor Needs to Take to Get the Screening Process Going?

Hammar: We have a number of resources. We have a Web site that is devoted to that issue, www.screenchurchstaff.com, where pastors can view and order the screening tools that have been put together over the years—applications, videos, books, etc. Criminal records checks can be done on that Web site. We’ve endeavored to provide the tools that churches can utilize to engage in a process of screening workers, both volunteer and employee.

Cobble: One starting point is to use a written application. It seems natural that people would do that, but the reality is that many churches still do not use written applications. The importance of a written application is to document what you’re doing and to have proof if you ever need it to demonstrate that you have engaged in reasonable care. We have applications specifically prepared for church employees, for ministers, and for volunteer workers. Churches can obtain sample copies of what their local school districts use, or they can get copies at a library. When written applications are used, they need to be followed through on, doing checks of the people that are listed as references on that application. They also want to interview that worker and provide some training for that person, if the person is hired.

It’s important for church leaders to understand that the screening process is just as important for volunteers as it is for paid employees; because, if a problem of negligent selection is alleged, it doesn’t make any difference what the employment status is of that person. It has to do with duties and responsibilities. In many churches, volunteers have just as important duties as those who are paid employees.

In Light of 9/11 and What Happened in September 1999 at Wedgewood Baptist Church in Texas, How Concerned Should Churches be About Security Issues?

Cobble: Churches need to be concerned about security in terms of the frequency and severity of specific kinds of accidents and problems. For example, there are not very many incidents like what happened at Wedgewood Baptist Church, where somebody comes in and shoots people. It doesn’t happen often, but it gets a lot of attention when it does.

But churches need to be concerned about security for more basic reasons. On the property side, for example, based on our 2003 survey of about 1,000 churches, one of every five churches experienced theft last year. And 16 percent experienced vandalism. The frequency of these things is high. That’s one reason, simply because theft happens frequently and churches are often targeted because they don’t take precautions and they have items that people want. That’s on the property side.

And another thing happens in dealing with fire. A church needs to be prepared for a very severe incident. What would a congregation do if its sanctuary burned down? What would the congregation need? How would they go about collecting contributions? The typical church has no plan in place to address that. So that is a security issue; a financial security issue as well as a ministry security issue.

On the other side of security are personal injuries—the slips and falls by people who use the building. They may be outside groups. People today are not shy about suing a church.

Hammar: With regard to the acts of violence: There have been so few cases involving churches, that it’s difficult to comment on that. If someone were to bring a knife or a gun into a church and kill someone, the only possible basis for liability for the church would be negligent supervision or failure to provide a minimal level of safety on the property. Generally, a church is not going to be found liable.

Cobble: There is very little a church can do to prevent somebody who was intent on harming other people from carrying that through. But on a more fundamental level, churches can do basic things, such as proper illumination around their building and monitor their parking lot during services. They need to lock doors and windows at the conclusion of services.

On a staff level, churches need to train church secretaries how to respond to transients and homeless people who come to the church looking for assistance. The secretary is often the only person in the building. She may be flooded with feelings of fear and concern for personal safety, and guilt on the other hand of feeling that she needs to help this person but has no idea what to do. Because no one addressed this issue in advance to help prepare her, she isn’t sure what she should do.

Many churches have not thought through the type of security measures they need for their entrances. Whether or not the doors should be locked. Whether they should have buzzers that enable people to gain access. Whether they should use video surveillance equipment around the building. We have found that larger churches are doing all of these things. They often have professional people and staff members who have the time, and the churches have the finances. But smaller churches often have no guidance in how to respond to these concerns, and they don’t think about them until after a problem has occurred.

Hammar: In terms of parking lots, there have been a number of cases where church members have been assaulted, raped, kidnapped, or killed in church parking lots. A lot of churches have activities at night and parking lots are often dimly illuminated. Portions of those parking lots are isolated and are sitting ducks for mayhem.

Please Discuss the Web Sites You Have Made Available for Pastors and Church Leaders.

Hammar: The primary Web site is www.churchlawtoday.com. Our site, www.screenchurchstaff.com has a more specific purpose. We also have a third Web site: www.newminister.com. This site provides newly credentialed ministers with what we consider to be the most important legal and tax information with which they should be familiar. So we cover a number of legal issues and tax issues: What is a housing allowance? Should I opt out of Social Security? How do I substantiate my business expenses? What about my duty to report child abuse? These and other issues are fundamentally important to the new minister, and yet the vast majority of new ministers have no concept of these issues.

Cobble: The principal purpose of www.churchlawtoday.com is to provide resources and training for all levels of congregational leadership and service. We have weekly lessons for pastors, board members, church treasurers and bookkeepers, business administrators, youth ministers, children’s workers, as well as for denominational leaders. It is based on a curriculum that people can work through over a period of time that will provide them with just a little information every week. It’s a bite-sized approach. They can spend 10 minutes a week to gain vital insights into legal and tax issues that are relevant to their positions.

There is also a weekly risk-management focus with a corresponding checklist that is coordinated seasonally with the risks that might occur. Congregational seminars are available online for volunteers and staff members covering a wide range of issues. For example, one person wanted more information on something as basic as organizing a trip to the beach for an outing and how to make that a safe activity.

We also have online resources that include a very extensive legal and tax library, an executive update newsletter that is published the first and 16th of each month, a monthly board report, a monthly treasurer report, and then a discussion board that is used by individuals across the United States to interact on a wide range of issues for which they find it difficult to get personal help.

Is There Anything Else You Would Like to Share?

Cobble: Safety concerns have evolved over time, as a result of 9/11, acts of terrorism, and also the scandals in the Catholic church. All of those have created a national environment in which safety has increased in terms of being an important concern that people want action on. Now whether it’s employment screening for airport employees who will screen passengers as they go through, or screening people who go onto school campuses, the environment we live in today is different. It’s important for church leaders to understand that there is an expectation that is different today than a generation ago. Too often church leaders are motivated by fear: fear of being sued, fear of financial penalties that will be applied to them, fear of public image, as the media publishes on the front page these issues in the life of the church. And rather than be motivated out of fear, church leaders need to be motivated by love and care out of our sense of calling and mission.

No one would have thought that mold would become a serious legal issue, not simply a public health issue. Mold in churches and in workplaces and in homes has become an environmental hazard that’s resulting in massive liability.

Hammar: We feel that it’s very important for church leaders to be aware of developments, because risk management is an evolving concept and risks change over time. For example, last year we addressed the issue of 15-passenger vans. (See sidebar "What Church Leaders Should Know About Church Vans.")That is an emerging issue. We are addressing the issue of defibrillators in churches. Should churches purchase one? (See sidebar "Should Your Church Purchase a Defibrillator?") Can they be liable if somebody dies in their congregation because the church didn’t have one of these devices available? These are questions church leaders are asking, and so we try to provide the most up-to-date information with regard to these issues.

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