Texas Insurance Problems Affect Churches, Too

Among the volunteers who stepped up after the storms that hit the Houston area in May were those from United Methodist churches attending the denomination’s annual Texas conference, which covers East Texas.

As they organized supplies and cleared debris, their churches were affected by the weather in other ways. The dynamics that have led to skyrocketing homeowners insurance premiums across the state — extreme weather, construction prices due to inflation — are also affecting Texas houses of worship, some of which have lost their home coverage or pay higher premiums for less coverage.

“I’ve gotten a number of calls, on a regular basis, from churches (affected by insurance issues),” said the Rev. Will Reed, director of operations for the UMC’s Texas Annual Conference, which includes about 300 churches from Texarkana to the Gulf Coast, including about 50 in Houston.

Many local Methodist churches are seeing premiums increase by 20 to 30 percent, he said, but some have reported that their premiums will increase much more or even have their insurance policies canceled altogether.

“It’s pretty serious. When a small church has an insurance bill that doubles, in some cases it significantly impacts their ability to operate,” Reed said.

The scale of the problem is difficult to pin down. Places of worship often have several types of insurance policies, covering everything from liability to vehicle coverage. But property coverage is probably the most problematic.

“I would tell you the church property insurance market is probably the biggest dumpster fire of all the property insurance markets in the state,” said Ron Wadley, an insurance agent based in North Texas whose agency specializes in insuring churches.

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Under state law, places of worship are considered commercial properties. That being said, the state does not track property insurance premium trends for places of worship specifically. And companies offering commercial real estate insurance, including those focused on places of worship, are not required to notify the Texas Department of Insurance about changes that only affect part of the state.

So the news of cancellations is coming from churches, synagogues and mosques themselves. Earlier this year, for example, KXAN-TV in Austin reported that Church Mutual, considered one of the biggest players in the field, had dropped its policy plan covering about 300 Methodist churches in the Rio Texas Conference in central and south Texas. Cancellations have also been reported by other Texas churches and houses of worship in other states, the Christian Chronicle reported this year.

Church Mutual did not immediately respond to questions about how many policies it has decided not to renew in Texas, or whether it is still drafting new policies in the state. Churches and agents have reported that other insurers are also pulling out in Texas.

But in a recent article on the industry website WorshipFacility.com, Pam J. Rushing, president of subsidiaries and chief underwriting officer for Church Mutual, explained why severe weather affects the cost of insurance for churches, and even their ability to find or maintain insurance in the first place.

“As the cost of weather-related losses rises, insurers are asking places of worship to share more of the risk by raising rates and deductibles. In some parts of the country, insurers simply cannot charge enough to offset the risk of large losses,” Rushing wrote. “In these cases, insurers may refuse to provide a quote to a potential customer or make the difficult decision not to renew existing customers’ policies.”

Wadley explained that the problem is simply one of supply and demand.

“There are very few options for getting coverage, so we’re seeing prices continue to rise,” Wadley said. “The companies that are still in the market are charging astronomical amounts of money, and the closer you get to the ocean, the more you end up with additional fees.”

Other factors complicate the situation further. Churches, synagogues, mosques and other houses of worship often have large physical footprints, meaning they are more expensive to insure than a typical single-family home. Even though church attendance has declined over the past 20 years, according to Gallup, downsizing is generally not a practical option for most houses of worship.

And while many religious communities are financially supported by parent organizations, most rely to some extent on donations from their members, who are also facing higher costs for food, transportation, housing and, of course, insurance. And like many of their congregants, houses of worship facing an insurance budget crisis are having to cut back.

“If you get a big raise, you have to make cuts somewhere else to pay that bill,” Reed said. “The more money you spend on real estate, the less money you have to do ministry.”

For churches that have lost their homeowners insurance, the options are relatively few. The solution isn’t much different than that of homeowners, according to Ben Gonzalez, a spokesman for the Texas Department of Insurance:

“We recommend working with an independent insurance agent to shop around and see if another company is willing to offer this coverage.”