A church in Lubbock was considering joining a risk purchasing group for their church property insurance. They had seen their church insurance premiums rise year after year. Along with those increases, they had seen their coverage limits shrink and their deductibles grow. This had left them seeking alternatives.
The insurance premium on the proposal looked much better than what they had seen in the past, and they were feeling hopeful. But when they dug into the details, their finance team got confused fast. There was a slew of extra fees beyond the base insurance premium.
The church leaders had no idea what a policy fee, a stamping fee, a contribution fee, or installment fee were and why they were being charged. They started to wonder if they were really getting a good deal at all. They decided to call a church insurance specialist for help understanding what they were looking at.
Policy Issuance and Processing Costs
Every time a new insurance policy is written, the insurance company has to do a lot of paperwork. This is true whether you are a business or religious organization. They have to review the buildings, write the documents, and get everything ready. This takes time and money, even if the policy is small.
To help cover the operating costs of that work, many insurance companies charge a policy fee. The Lubbock church had never seen this before. Due to the rising premiums, they were now evaluating the risk purchasing group option that pushed them into the non-admitted insurance marketplace which brings fees. Once they understood that it helped cover underwriting and setup costs, they realized it was pretty common.
Surplus Lines Taxes and Regulatory Compliance
The problems with church property insurance coverage in Texas over the last two years are well documented. Companies non-renewing policies or making changes to the terms of policies have created stress in securing coverage with new insurance providers.
As a result, many churches in Texas are now using surplus lines insurance companies for their property coverage. This is exactly where our Lubbock church found itself with the Risk Purchasing Group. These companies are not based in Texas, so they follow a different set of rules.
When these companies write a policy, they have to pay state taxes and fees that can add to the total cost of insurance. These fees and taxes include the surplus lines tax and the stamping fee. They aren’t made up by the insurer. They are required by the state government and passed along to the church. And no, your tax exempt status doesn't get you out of these fees.
The church in Lubbock was surprised by this, but their agent explained that it’s normal when using a non-standard carrier.
Risk Purchasing Group Membership and Contribution Fees
One unique aspect of joining a risk purchasing group is that they allocate part of their costs as fees rather than insurance premiums. These programs give the church access to better pricing and a large pool of churches to share risk with, but understanding the fees listed can be confusing even to experienced insurance agents.
The Lubbock church saw a contribution fee listed on their proposal. They didn’t know what it was for at first, and couldn't think of a scenario that would make it make sense. Their church insurance specialist explained that this fee creates a reserve fund for the entire group. This reserve fund helps the group pay for smaller claims without going to the big insurance companies working behind the scenes.
The reduction in claims history with the big carriers allowed the risk purchasing group to get a better cost of church insurance since the cost of claims was kept lower overall. That made sense to the church leaders and they like the aspect of spreading these costs over a larger group of churches that were diverse in their size and location.
Inspection or Engineering Fees
Because the Lubbock church had older buildings, the insurance company wanted a full inspection. This helps make sure the property is in good shape and shows any problems that need to be fixed. Because of the size of the Lubbock church, they also wanted to have an inspector on-site to evaluate potential risk exposures that could derail the entire program.
That inspection cost money, and it showed up as a one-time fee on the proposal. Once they got the report, the church leaders saw it was helpful as it identified deficiencies that could put the church at risk of claim later. They understood that the assessment of these risk exposures was helpful not just to the church, but also the rest of the program.
Installment or Payment Plan Fees
Like many churches, the team in Lubbock didn’t want to pay the full insurance premium all at once. Those payments have become far too large a portion of their annual budget. They decided to choose a monthly payment plan to help manage their cash flow over time.
However, they noticed small fees added to each payment and were concerned it might be a penalty. Their church insurance agent explained that these are just standard service fees for splitting the payments over time.
Working With a Church Insurance Specialist Made It Simple
In the end, the Lubbock church got the help they needed. The church insurance expert helped them understand every part of the proposal and explained each fee. The independent agent asked them questions up front to understand their church's ministries and needs. Together, they found a customized plan to provide the types of coverage they needed most. This is what True Texas Church Insurance is all about. Finding the right solution to the problem.
Our friends in Lubbock saw how the program worked and why the fees were part of it. Most of all, they felt confident they were making the right decision for their church. They had peace of mind that they had found a great solution to their unique needs.
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