Black Congregations Face Insurance Snarls in Wake of Church Burnings

When arson severely damaged the Salem Baptist Church in Humboldt, Tenn., on Dec. 30, worshipers thought life couldn’t get worse. The sole saving grace, in hindsight, was the flames’ merciful swiftness--because what followed was a protracted struggle by the church to collect on its insurance policy and rebuild.

It took five months to get the final installment of the $185,000 insurance payment. Then, a week later, the insurer canceled coverage.

Insurance problems have emerged as secondary grief for many of the more than 40 black churches that have been damaged or destroyed by fire across the South in the last 18 months.

Some black ministers say insurers have interrogated them as arson suspects and routinely procrastinated on paying claims. In a number of cases, insurers have refused to renew policies.

An added insult to blacks is their perception that the many white churches burned over the same period are receiving kid-glove treatment from insurers. A spot check by Associated Press lends credence to the complaints, indicating that after white church arsons, insurers paid claims promptly and earned high marks from pastors for courtesy and efficiency.

Of 10 burned black churches and eight white churches contacted by the AP, five had had their insurance dropped--all of them black.

“It just goes with everything else as far as black people are concerned,” said Joseph Gatewood, a black insurance broker in Charlotte, N.C. “Our property is undervalued, our homes are undervalued--our lives, for that matter, are undervalued.”

Insurance complaints have been serious enough to draw an investigation by Robert George, a member of the U.S. Civil Rights Commission. George says he will refer any evidence of impropriety to the Justice Department.

George said insurers who handle claims of black churches differently from those from white parishes are exhibiting racial bias. If they treat church claims differently from those for other kinds of property, he said, it’s religious discrimination.

Insurance professionals deny discrimination. They express eagerness to write church policies and say it’s unlikely any church--black or white--would be denied.

But the AP’s check of victimized churches indicates otherwise:

* Salem Baptist, Humboldt, Tenn.: Policy canceled by Preferred Risk Mutual Insurance Co. of Des Moines, Iowa.

The black church paid premiums of less than $1,000 a year, which proved to be “a thoroughly unprofitable relationship” for Preferred Risk, said Thomas Farr, vice president and general counsel. “In the six years we insured them, we’ve paid just under $190,000 in claims.” That includes the $185,000 paid on the arson claim.

The Rev. David Donaldson, pastor of Salem Baptist, said the church had filed four claims since 1991, “but the other three were minor claims, for $3,000 or less,” resulting from vandalism.

* Mount Calvary Baptist Church, Bolivar, Tenn.: Policy canceled by Preferred Risk.

The black church paid an annual premium of $600 and had filed six claims since 1990, including $87,000 for arson damage Jan. 31, 1995. “You have to look at all the facts and make a business judgment,” Farr said.

* Glorious Church of God in Christ, Richmond, Va.: Six days after a Feb. 21 arson fire gutted the 1811 granite-block sanctuary, Aetna Casualty & Surety Co. announced that it would not renew the church’s policy, which was due to expire April 15. The policy was reinstated June 21 after public condemnation by the state attorney general.

In its February notice, Aetna, since acquired by the Travelers Group, cited an “adverse claims history,” but church elder Morris Mahoney said the church had made just one prior claim, for $8,000 in autumn 1995, after lightning struck the chimney.

* Inner City Church, Knoxville, Tenn.: Policy will not be renewed when it expires July 25.

The church was spray-painted with racial slurs and torched Jan. 8. The Lutheran Benevolent Insurance Exchange in Alma, Mo., paid its claim, in excess of $500,000, but said “loss experience” dictated non-renewal, said the church’s pastor, the Rev. David Upton.

Gary Leimkuehler, Lutheran Benevolent’s marketing manager, said he couldn’t release specific information about the decision not to renew, but did say the company and church disagreed on the extent and dollar value of the damage.

“These people are sometimes extremely difficult to deal with at the time of the loss,” Leimkuehler said.

The story was distinctly different at three burned white churches:

* The sanctuary of Heights Christian Church in Houston was damaged by arson April 19. By late May, Preferred Risk had settled the claim “in excess of $100,000,” and on June 30 agreed to renew the policy.

* A June 17 fire at Pine Lake Baptist Church in Stone Mountain, Ga., destroyed a 1948 wooden sanctuary the church had been using as a school.

Jace Brooks, Pine Lake’s minister of education and administration, said Preferred Risk offered immediate cash and helped clean the burned structure and replace windows and air conditioners broken by firefighters.

Brooks said the company has “been incredible with their efficiency and effectiveness.”

* At Cypress Trails United Methodist Church in Spring, Texas, a suburb of Houston, arsonists burned down the church’s office and educational building on Jan. 27. The church, whose congregation is 95% white, negotiated with State Farm Insurance Co. for several months but eventually settled for $275,000 in May.

The rash of fires has provoked a sharp increase in insurance inquiries, especially in the South, from churches that fear they are underinsured, said Pat Moreland, a spokesman for Church Mutual Insurance Co. of Merrill, Wis.

But it is unclear whether more inquiries will translate to more policies.

Southern Mutual Church Insurance Co. in Columbia, S.C., for example, has paid 17 claims on suspicious church fires since 1991, eight for white churches, nine for black, and hasn’t canceled any policy.

“We don’t code in an arson fire claim any differently from any fire claim,” said Robert Bedell, a company vice president. “But this is by nature a discriminatory business. Any company writing this insurance wants to make sure they can make money on it. They’re not writing it for charity.”