Category: Property Insurance


In a denomination (or a rose by any other name…conference, fellowship, or whatever word is used), the governing documents will determine the relationship between the denomination and the local church.  Typically, in most states, the practice generally is that both the denomination and the local church are separate non-profit corporations.  In some states, the local church may be an unincorporated association, which is also a type of legal entity.  However, the governing documents of the denomination, and maybe, too, the local church regardless of its form, may make the local church a type of “trustee” holding its property for the benefit of the denomination.  In such organizations, if the local church dissolves or departs from the denomination, the title to property reverts to the denomination.  In other words, the denomination and the local church may be separate entities but not necessarily equal.

In Church Mutual Insurance Company v Guideone Specialty Mutual Insurance Company, Slip Op. (Cal. App. 2021), the local church ceased to exist and the property reverted to the denomination pursuant to the denominational governing documents.  During the short interval while the property was, in effect, owned by both before the reverted title could be filed of record, the building was destroyed by fire.  The denomination’s insurer paid the loss but sought contribution, subrogation or indemnification by the insurer of the local church.  The trial denied the claim.  The appellate court affirmed the trial court.  The appellate court held that the denomination and the local church, as an unincorporated association, had an “agency relationship.”  But, that did not automatically make the two entities the same entity for insurance purposes, even if the denominational governing documents were cast in terms of “unity” of both.  In other words, too, the Church Mutual policy did not name the local church as an insured and the Guideone policy on the local church property did not name the denomination as an insured.  Thus, the denomination was not covered by both policies (and neither was the local church covered by both policies).

Just as the best practice is for the title of property to reflect a denomination’s reversionary interest, so too is it the best practice for the denomination to be named as an additional insured on the property insurance policy purchased by the local church.  Both practices are hard to install and police over time.  Denominations should work with their insurers to offer a “package” that contains such endorsements to their local churches.  Insurance purchases are typically an after thought both at the denominational and local church levels.  Thus, at both levels economies of scale through combined bargaining power are lost and higher premiums are habitually paid.


Denominational determinations that a church or parish is no longer viable usually start with a nearly empty church building the remaining membership of which, no matter how faithful, can no longer financially bear the burden of the corporeal existence of the church. Even without a mortgage, church buildings require maintenance, grounds must be maintained, and parking lot potholes must be filled.

In St. Cyrillus v Polish National Catholic Church, Slip Op. (unpublished) (NJ App. 2020) the local church building was destroyed by fire. All that was left of the church property was the land and the $1,000,000 paid out under the fire policy. The church building could not be rebuilt for $1 million but the local church had no fund-raising plan to accumulate the difference. The local church membership prior to the fire had dwindled. The denomination dissolved the local church and took control of the land and money. The trial court granted summary judgment to the denomination. The appellate court affirmed. The governance documents of the local church required the local church to obey hierarchical rulings as did the governance documents of the denomination.

The process by which a non-viable church is swept from existence is usually foreclosure by a lender. However, in those rare instances in which a church is no longer viable, and under denominational control, denominational decision making will likely be binding. For churches not under denominational control, winding up the affairs of the church, once the excruciating decision to do so has been made, an asset merger with a viable congregation is the most pain free method.


If there is any policy marketed by any insurance carrier to cover risks in a church split, and what the terms and cost might be, we are unaware. However, what typically happens in a church split is that the faction in control of the church, that can retain the corporate entity, usually can retain the insurance policies. That does not automatically mean there is any coverage in a church split, but the insurance that there is will typically go with the corporation. On the other side, the faction that loses control of the corporation or incorporates a new entity to be the secular embodiment of the church typically has stepped completely outside the umbrella of insurance coverage for nearly all types of claims, related to the split or not. (The word “all” is too often overlooked by readers. “All” by definition is ad infinitum bearing of no exception.)

In Newton Covenant Church v Great American Insurance Company, Slip Op. (1st Cir. 2020), the United States Court of Appeals for the First Circuit affirmed the Massachusetts federal trial court that granted the insurance carrier’s motion to dismiss. The Plaintiff was formed by a departing faction. The Plaintiff and some of its leaders or officers were sued by the denomination to dislodge them from the local church property and recover the local church assets. The leaders or officers of the Plaintiff sought a defense under the duty to defend. The duty to defend is in every insurance policy likely to be bought by a church. Under the duty to defend, the defense of a lawsuit against an insured must be paid for by the insurance carrier. However, the insurance carrier denied the claim for a defense. The insurance carrier’s policy named the predecessor local church corporation as the insured and not the faction that departed. Also, the policy expressly excluded lawsuits among insureds. The trial court held the lawsuit by the denomination filed against the departing faction, which had been members of the denomination, was a lawsuit among insureds.

In a split, departing factions that no longer have control of the original church corporation, like any brand-new church, have no insurance until it is purchased. That will generally include everything from employee health benefit programs to auto policies. Any lawsuit with the denomination or faction left in control of the church corporation will generally require out of pocket attorney fees and court costs to defend.


Most of the time when a utility like a sewer fails clean up and repair follow at costs low enough for the local church, like any other property owner, to absorb. But, when it is a disastrous backup from a city maintained line the damage from which is either not insured at all, or inadequately insured, further investigation of the cause may be required. If the cause is not the church building or its people, it may be the municipality providing the sewer line. If it is, the church may have to proceed with a claim for reimbursement of its damages.

In Crestwood Vineyard Church, Inc. v City of Oklahoma City, 2020 OK CIV APP 3, the trial court’s summary judgment in favor of the city was reversed. The church timely filed a tort claim notice in compliance with the state tort claim statute that required filing of the notice. Without such a properly filed notice, the lawsuit may have been barred. When the city denied the claim, or by operation of law it was denied, the church filed suit. The trial court entered summary judgment because the city proved it had no user complaints from the sewer line in the five years prior to the incident. The sewer back up into the basement of the church was cleaned out by the city but the damage to the basement was extensive. The appellate court held that while the lack of a user complaint to the city indicated the city did not have that type of notice, the city had not proven it lacked notice by virtue of its own maintenance records. On remand to the trial court, the church will have the opportunity to prove through sewer maintenance records, if the church can do so, that the city had another form of notice.

A large city may or may not have records that are reliable as to whether there were, indeed, user complaints. Complaints may come from so many sources that complaint tracking for a government entity is a technological and records preservation challenge. A church in such a situation should check with the neighbors, such as other users on the same sewer line. Whether maintenance records will prove the matter one way or another may also be problematic. A large city covering many square miles and managing substantial infrastructure may or may not have records of completeness and clarity. Gaps in maintenance records, if any, may be more valuable than the records themselves.