The letter showed up on a quiet Tuesday morning. It was neatly typed, formal, and packed with legal language that most people would rather never see. The words “notice of claim” jumped out immediately. For Pastor Jim, it felt like the ground shifted beneath his feet.
Jim had been counseling a member of his San Antonio congregation. The sessions had been honest and heartfelt, but the person later claimed that his advice made things worse instead of better. Now the church was being accused of harm and a lawsuit had been filed.
Jim believed the truth would come out. What he wasn’t prepared for was the sheer cost of a legal defense that included lawyers, filings, depositions, and expert witnesses. Long before any judge made a ruling, the bills started stacking up.
This is where his church’s Pastoral Liability insurance policy stepped in. And it wasn’t just about protecting against damages. The bigger story was how the church insurance policy handles defense costs. Because in many liability claims, the defense can cost more than the actual settlement.
The lesson here isn’t just for pastors facing counseling accusations by the way. These same mechanics apply to other church liability insurance policies as well, that can include any of the following.
Adequate insurance coverage for your church's liability needs has to spell out how this works. Let's look at what Jim learned.
If you need more information, an FAQs is at the bottom of the page. Now back to Jim's story.
When most church leaders think about liability insurance, they picture a check being written after a judgment or settlement is made for bodily injury or property damage. What they don’t realize is that insurance often proves its worth long before a judge or jury has the final word.
That’s because legal defense is expensive. Attorneys charge hundreds of dollars per hour. Expert witnesses, investigators, and court fees pile on quickly. Even if a lawsuit is groundless, your church is still required to respond, and the cost of simply showing up in court can be staggering.
This is why the structure of your church liability insurance policy matters so much. It isn’t just about whether you’re covered for damages. It’s about whether you’ll be able to afford the process of defending yourself in the first place.
One of the first things to understand is how your insurance company handles its obligation to defend you. There are two very different approaches, and the difference can completely change your church’s experience when a claim arrives.
The second option might sound fine in theory to your church board, but in practice it can crush a church financially. Claims adjusters for your church insurance company can take their time determining if your expenses are legit and valid. This can delay payments and put heavy strains on your church budget while you wait for reimbursement. For most congregations, that simply isn’t feasible.
Jim’s church was protected by a duty to defend policy, which meant his insurer stepped in right away with experienced legal counsel. Since most church insurance policies are set up this way, church officials didn't have to worry about how long their money would be tied up.
Another important detail is how defense costs are treated in relation to the overall limit of coverage on your church insurance policy. Many church leaders assume the policy limit only applies to damages or judgements, but that’s not always the case.
In Jim’s situation, his church’s policy covered the attorneys, investigators, and expert witnesses separately from the liability limit. That meant every dollar of the liability limit was still available for damages if needed.
This distinction is critical. There are two ways to defense costs on your policy.
Imagine having a $1 million liability limit. If defense is outside the limits, all $1 million is available for damages, no matter what the lawyers cost. But if defense is inside the limits, and your defense runs up a bill of $100,000, that leaves only $900,000 for damages. That difference can have massive consequences.
There are also two additional mechanics that many church leaders don’t fully realize until they’re already in the middle of a claim.
First, the insurance company typically controls the defense. They choose the lawyers and direct strategy. This can feel uncomfortable for leaders who are used to making every decision themselves. But the benefit is that these lawyers are experienced in church liability defense, and their sole focus is protecting your church from the legal threat at hand.
Second, defense is provided even if the claim has no merit. That is what happened with Pastor Jim. He knew he had acted in good faith, but the accusation still triggered a legal process. The insurance company stepped in to provide defense, not because the church was guilty, but because the church needed to be protected while the process played out. That is exactly why liability insurance exists.
Jim’s story may be about pastoral counseling, but the principles apply far more broadly. These same defense mechanics apply whether someone slips on your front steps, accuses your board of mishandling decisions, or claims that a staff member acted improperly.
Your church doesn’t control who files a lawsuit. You only control how prepared you are when one arrives. The way your church liability insurance policy handles defense costs can mean the difference between peace of mind and financial panic.
That’s why it’s worth asking your agent direct questions:
The answers to these questions might feel like fine print today, but they can decide the future of your church tomorrow.
Pastor Jim’s church in San Antonio didn’t crumble under the weight of legal fees because they had the right protections in place. Their coverage gave them space to keep serving the community instead of scrambling to pay lawyers. That’s the quiet power of liability insurance when it’s structured correctly.
No insurance policy will ever replace faith. But defense costs, when handled properly, can reinforce your ministry’s ability to keep moving forward when storms arrive.
Your church’s reputation is built on trust and stewardship. Your church insurance should reflect the same values. It should be transparent, dependable, and ready to stand strong when the unexpected happens.
Because when the storm comes, and it always does, you want to lead with clarity, not fear. That's why we created True Texas Church Insurance. The goal is to make sure that you focus on your community and congregation, and the insurance company focuses on helping taking care of the claim.
Click the button below to schedule a review of your church’s liability coverage. We will help you understand how defense costs are handled before the storm arrives.