Insurer: No denial of coverage to churches

Rumors swirled last week after someone leaked a memo from a church insurance company. The internal bulletin addressed same-sex marriage and said a church that refused to marry a gay couple, if sued, would not be covered under the company’s regular liability policy. That seemed to suggest a serious new problem: Would insurance companies abandon churches that believe marriage can only be between one man and one woman?

“Homosexual agenda causing churches to lose insurance,” one website headline warned.

Now the president of the insurer that issued the bulletin, Southern Mutual Church Insurance Company, says he wants to set the record straight.

“I can’t speak for the industry, but I can absolutely tell you, when it comes to Southern Mutual Church Insurance, that is false,” Robert Bates told me this week. “Churches are not in jeopardy of losing their insurance coverage because of the belief that they choose to practice.”

Following the Supreme Court’s June decision in Obergefell v. Hodges that legalized same-sex marriage across the country, church leaders are worried about the possibility of being sued if they refuse to host a gay wedding.

The insurance bulletin, sent to sales agents by Southern Mutual’s vice president of underwriting, David Karns, said churches have been calling the company with their concerns.

“We have received numerous calls and emails regarding the Supreme Court’s ruling on same-sex marriages,” said the bulletin, published online by National Review. “The main concern is whether or not liability coverage applies in the event a church gets sued for declining to perform a same-sex marriage.

“The general liability form does not provide any coverage for this type of situation, since there is no bodily injury, property damage, personal injury, or advertising injury.”

The bulletin continued: “If a church is concerned about the possibility of a suit, we do offer Miscellaneous Legal Defense Coverage. This is not liability coverage, but rather expense reimbursement for defense costs. There is no coverage for any judgments against an insured.”

Bates told me the bulletin was not a position statement and was not intended to deny coverage, but the opposite. Southern Mutual’s regular church liability policy, written according to industry standards, only covers lawsuits in which injury or property damage is alleged. So last year the company created a form of add-on coverage—Miscellaneous Legal Defense Coverage—in response to churches concerned they wouldn’t be protected in a case where no injury or damage was alleged.

Besides a lawsuit over a same-sex wedding, the miscellaneous policy would cover a church sued over bell ringing or loud worship services, Bates said.

Southern Mutual even dropped the price of the add-on policy by 50 percent “in order to make this coverage affordable to our churches,” Bates said. The purpose of the bulletin was to encourage sales agents to offer the additional coverage to churches.

“This is a unique coverage that our company has designed at the request of our churches, to protect them,” he said.

It’s true the miscellaneous policy wouldn’t cover judgments from a lost lawsuit (that is, court-ordered fines and payments). Bates said the policy add-on was “not designed from a coverage or rate standpoint to address damages from a suit.” The lowered premiums range from just $20 to $160 per year.

Bates said Southern Mutual covers both churches that are likely to perform same-sex weddings, and those that are not: “We don’t, as a company, have a position on same-sex marriage. … We’re here to protect our churches based on what their positions are.”

Southern Mutual provides liability coverage for more than 8,400 churches, synagogues, and mosques in Tennessee, North Carolina, South Carolina, and Georgia. It still covers the first church it insured in 1928.

The recent changing legal landscape has created a lot of “unknown territory” for churches and communities, Bates acknowledged, prompting companies to create add-on policies. Another example is “violent acts coverage,” which insurance companies began offering to churches a few years ago.

One of Southern Mutual’s own policyholders is using the violent acts coverage right now: Emanuel AME Church in Charleston, S.C. On June 17 a gunman shot and killed nine churchgoers at Emanuel, including pastor Clementa Pinckney, a state senator and Southern Mutual board member.