The decisions and operations of a church board may expose board members to personal liability and even lawsuit. Take these steps to help protect your board.
1. Understand your state's charitable immunity laws.
Some states provide charitable immunity for volunteers, which may include church board members. The purpose of this law is to encourage them to serve by reducing liability exposure. Check to see if your state provides charitable immunity and whether its definition of "volunteer" covers church boards.
2. Avoid gross negligence.
In most states, charitable immunity laws do not protect against gross negligence, defined as any act or omission that is intentional, willfully negligent, or committed with disregard or indifference towards the safety of others. At one church, the board members were personally sued because of an incident that occurred at the church between a minor and an adult known to be a past sexual offender. The plaintiff alleged that the church board failed to provide and enforce a sex offender policy after knowing the offender attended the church—a failure that amounted to gross negligence.
3. Incorporate your church.
Maintaining a corporate status with your state has the benefit of providing personal liability protection for your board members and other church leaders. Check with your Secretary of State's office for information on becoming incorporated and to update your status annually, or as required.
4. Follow your own rules.
Church bylaws can provide crucial legal protection, as long as you operate by them. If there is a legal dispute, a court may look to the rules established in the bylaws for guidance. In addition, the bylaws should include provisions that indemnify (protect) board members from personal liability for board decisions. An attorney can assist you in amending the language if needed.
5. Obtain directors, officers, and trustees (DOT) insurance.
If someone brings legal action against a board member, defense costs could be steep. In addition to paying for claims that may arise, DOT insurance covers the cost of legal fees.
Following these five practices can greatly reduce liability for your board members so they can focus on serving.
Get more tips like these in the free church finance guide below.
For more information about church liability and insurance coverage, call 866.621.1787or email me at jsparks@agfinancial.org.
This article does not constitute legal advice and is not a substitute for obtaining professional legal counsel.
