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The world of post-SCOTUS gay marriage and church insurance

The world of post-SCOTUS gay marriage and church insurance

As told by one of our readers

Last week, we took a look at an insurance notification received by a church in Oregon. National Review’s David French originally reported the story.

Those fearful Obergefell v. Hodges could spell trouble for religious liberty were validated much sooner than anticipated.

Less than 48 hours after the decision was handed down, New York Times columnist Mark Oppenheimer called for the end of tax exemptions for religious institutions.

And the piecemeal dismemberment on religious liberties continues.

Now infamous for their intolerance of Christianity, Oregon continues to be ground zero for the Biblical Principles vs. Ideological Fascism showdown.

National Review’s David French explains an emerging problem for Oregonian pastors seeking liability insurance.

Churches, like virtually every functioning corporation, protect against liability risks and the potentially ruinous costs of litigation through liability insurance. With same-sex marriage now recognized as a constitutional right — and with news of Oregon’s Bureau of Labor and Industries awarding a lesbian couple $135,000 in damages for “emotional, mental and physical suffering” after a Christian bakery refused to bake their wedding cake — pastors are reaching out to insurance companies to make sure they’re covered. And at least one insurer has responded with a preemptory denial: no coverage if a church is sued for refusing to perform a same-sex wedding.

While denying insurance coverage is not itself an encroachment of religious liberty, lack of protection is as much a problem; one that could easily sink any independent church that winds up the defendant of a complaint.

French continues:

On July 1, David Karns, vice president of underwriting at Southern Mutual Church Insurance Company (which “serve[s] more than 8,400 churches”), wrote an “all states” agents’ bulletin addressing same-sex marriage. It begins: “We have received numerous calls and emails regarding the Supreme Court’s ruling on same-sex marriages. The main concern is whether or not liability coverage applies in the event a church gets sued for declining to perform a same-sex marriage.” Karns continues:

The general liability form does not provide any coverage for this type of situation, since there is no bodily injury, property damage, personal injury, or advertising injury. If a church is concerned about the possibility of a suit, we do offer Miscellaneous Legal Defense Coverage. This is not liability coverage, but rather expense reimbursement for defense costs. There is no coverage for any judgments against an insured.

In other words: Churches, you’re on your own. (National Review has tried to reach Mr. Karns and Southern Mutual’s corporate office, and they have not yet returned our calls.)

Monday one of our astute readers and blogger at Insureblog (a blog that covers all things insurance), provided a much appreciated technical view of the church insurance/religious liberty discussion.

Henry Stern writes:

SSM & Church Insurance

The other day, we looked at how health insurance (particularly group plans) will be impacted by the recent SCOTUS ruling on Same Sex Marriage (SSM). Now, the legal beagles over at Legal Insurrection have a very interesting post about the future of liability insurance in this new, enlightened age, and it’s not pretty:

“On July 1, David Karns, vice president of underwriting at Southern Mutual Church Insurance Company (which “serve[s] more than 8,400 churches”), wrote … The main concern is whether or not liability coverage applies in the event a church gets sued for declining to perform a same-sex marriage”

The short answer: No.

As usual when it comes to issues involving Property and Casualty (P&C), I turned to good friend and guru Bill M for his insights:

The reason that coverage in such circumstances would (likely) be declined is that it was an intentional act of violating the law. So if (when?) a church (or synagogue, or mosque) is sued for refusing to perform a SSM, the resulting lawsuit would not be covered. That also means the carrier has no “duty to defend” (basically: provide legal counsel).

Of course, any fines imposed by the state would also be excluded.

This is not quite the same as the linked post’s headline:

“Churches refusing to perform same sex marriages may be denied liability insurance”

At this point, no carrier is refusing to actually underwrite and issue a policy to non-complying churches for the simple reason that it’s not currently a part of the underwriting process. That is, there’s no question on the app that reads “Do you refuse to perform gay weddings?” If and/or when a claim arises because of such refusal, the carrier would simply deny coverage.

Now, actually denying to write a policy in the first place is currently pretty speculative. But as Bill pointed out to me, such a scenario is not necessarily farfetched:

Imagine Acme Church Insurance Company with 50,000 policyholders, 10,000 of which get sued for refusing SSM, and all 10,000 of these claims are denied. That’s a lot of ticked off customers, no? So what’s the likelihood that the next application version’s going to include a question about SSM, and if the answer’s not “sure, all the time,” then no soup policy for you.

Is that likely to happen in the next year or two? Probably not, but don’t be surprised when it does happen a few years down the road.

Bill also brought up another very disturbing thought: many (most?) churches have Boards of Directors (or Elders, or Deacons, etc), and thus likely have D&O (Directors and Officers) coverage:

“Errors and omissions coverage for an organization, its leaders, and governing bodies while acting within the scope of their duties.”

The reason for this coverage is that board members could be sued individually, putting their personal assets at risk for something their church or its leaders may have done (or not done).

Bill mused about whether such policies might also decline coverage for SSM-related claims. Talk about a chilling effect on lay folks volunteering for leadership positions in their congregations.

Brave new world, indeed.

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“The reason that coverage in such circumstances would (likely) be declined is that it was an intentional act of violating the law.”

Bullshit…!!!, to use a legal term.

What “law”? In what jurisdiction?

Your “expert” is full of crap. That kind of advise could put an insurer in a world of hurt. Quite rightly, too.

    DaveGinOly in reply to Ragspierre. | July 14, 2015 at 8:50 pm

    Now tell us what you really think, Rags!

    The “expert” here made a huge leap in presuming that Obergefell has any reach beyond applying the standards of the Constitution to the States’ practices in the issuance of marriage licenses. The standards and principles of the Constitution, no matter what anyone thinks of how SCOTUS interpreted and applied them, have to do with government and have nothing to do with churches or religion.

    What law? and in what jurisdiction? That would be the Federal 1965 Civil Rights Act which forms the basis of most of these claims.

      DaveGinOly in reply to SDN. | July 14, 2015 at 9:53 pm

      A search of the Obergefell decision did not reveal any instance of a reference to the Civil Rights Act; SCOTUS did not invoke it in its decision.

        It didn’t have to; once gay marriage was declared a civil right under the 14th Amendment, the Civil Rights Act automatically applied.

          DaveGinOly in reply to SDN. | July 15, 2015 at 12:46 pm

          You may be correct that the decision implies invocation of the Civil Rights Act. But still, the Civil Rights Act deals with civil rights, and not religious rights, nor does it pertain to religious beliefs or practices, both subjects out-of-bounds according to the Constitution and the much derided “separation of church and state.” The state simply cannot force SSM upon churches, even if in churches’ hiring practices they may have to abide by the civil rights act. The hinge here is that churches are “religious organizations,” that in their business capacity have to abide by civil laws. But in their religious capacity, as professors of religious belief systems, those systems are beyond the civil authority. Anti-polygamy laws may prove the exception to this, but I’m of the opinion that they’re unconstitutional, so from my point of view the state can neither prevent the sanctioning of polygamous marriages by a church, nor can the state force churches to perform SSMs. (Obergefell has made anti-polygamy laws highly vulnerable, IMHO.)

      siguiriya in reply to SDN. | July 15, 2015 at 1:04 am

      Oregon administrative Rules define an exemption for churches that discriminate on the basis of sexual orientation:

      (a) Housing and the use of facilities. It is not an unlawful practice for a bona fide church or other religious institution to take any action with respect to housing or the use of facilities when:

      (A) The action taken is based on a bona fide religious belief about sexual orientation; and

      (B) The housing or the use of facilities involved is closely connected with or related to the primary purpose of the church or institution; and

      (C) The housing or the use of facilities involved is not connected with a commercial or business activity that has no necessary relationship to the church or institution.

      Of course, administrative rules can be changed. And now that so-called gay marriage is a constitutional right, there may be pressure to eliminate the religious exemption. A few years ago I would have thought that impossible. Now . . . .?

        DaveGinOly in reply to siguiriya. | July 15, 2015 at 12:58 pm

        I’d consider those rules “assurances,” rather like SYG laws assure citizens they have no duty to retreat from criminal assaults. Neither infers that without them the state would be able to do that which is prohibited by the rule/law. (Another example of a set of “assurances” is the Bill of Rights. The 5th Amendment’s pronouncement that no person “shall be deprived of life…without due process of law,” does not infer that without this assurance that the state would be able to deprive someone of his or her life without due process.)

        As someone who frequently is required to consult the OARs, let me ask you:
        Where are “bona fide church” and “bona fide religious belief” defined?

        I don’t believe they are, so it’s not unreasonable for a judge to declare the protection meaningless without a definition.

        Also, that’s a rule pertaining to housing and the use of facilities (e.g. restrooms, showers, etc.), not the service of the pastor, church staff, or church building itself. I don’t believe it will hold up as a defense if a religious organization or pastor declines to serve a same-sex wedding ceremony.

    tarheelkate in reply to Ragspierre. | July 15, 2015 at 9:25 am

    I’m not an attorney, but I can tell you that my own conservative Christian denomination is already running web seminars on the risks associated with still being Christian. Many ministers in many denominations are beginning to consider refusing to sign ANY civil marriage certificates as a way to avoid this problem. Marriage will become one thing in civil law and another in church law.

    This approach might work for a while. Conservative churches are also beginning to face the possibility, down the road, of being denied tax exempt status.

      The only ones who will get sued are the ones spoiling for a fight.

      I suspect many are in fact spoiling for a fight.

        tarheelkate in reply to Andy. | July 15, 2015 at 3:34 pm

        What we have seen with bakers, caterers, photographers and wedding venues is that “gay” activists seek out targets they think will decline and then sue them. Small churches or individual churches not members of large associations are likely to be targets rather than, say, the Catholic Church as a whole. So churches don’t have to be “spoiling for a fight” to have difficulties.

          True the gays wish to pick a fight, but they are coming onto Church soil.

          Do you really think a pastor worth his salt cannot smoke these rats out in premarital counselling which most churches worth their salt require?

          …and yeah, lets see the gays get through premarital counselling with a traditional Christian.

      My own (very small, very conservative) church is also exploring the possibility of not doing weddings at all.

      The government can try to remove the tax-exempt status, but unless they remove the tax-exempt status from ALL churches and religious organizations, it violates the exact same “equal protection” clause in the 14th Amendment that got us where we are now, not to mention two clauses in the 1st Amendment: the right to freely exercise our religious beliefs and the prohibition on the government favoring one set of religious beliefs over others.

Tell the couple that because they already have the license, they’re already married. No need for the ceremony.

From about 35 AD until about 330 AD Christians got some serious oppression and persecution. It is here again and Putin wants to be Constantine.

    Skookum in reply to BillyTex. | July 14, 2015 at 11:09 pm

    And it’s hard not to admire Putin for it, although my guess is his actions are based not in principles but in geopolitical opportunism.

      theduchessofkitty in reply to Skookum. | July 15, 2015 at 12:50 pm

      And do you think Constantine’s actions were based on principles? He was a politician, after all.