Church Financial Records Subject to Review by Insurer

Commercial Lines – Property	Records
Conditions	Direct Damage to Property

When an insured church building and its contents were destroyed by fire, the insurer requested various financial records because it suspected the fire was intentionally set. The insured refused the request and asked a court to declare the records confidential and not subject to the insurer's review.

The insurance company filed a cross-motion for summary judgment, enabling it to review the records to assess the church's financial situation. The requested records included bank statements, monthly expenses, income, tax returns, and salaries of the directors and officers.

The court cited New York Insurance Law section 340(e), which outlines standard fire policy provisions and requires the insured to produce all relevant financial records, such as books of account, bills, invoices, and vouchers, or certified copies if the originals are lost. It also cited several key cases affirming the insurer's right to examine such records, especially when the fire's incendiary nature is suspected and financial data needs to be reviewed.

The court noted that the documents in question were related to the church's financial situation. Since the investigation was private and not governmental, the insurer's enforcement of its contractual rights did not violate the constitutional rights of the parishioners to freedom of association. The court also clarified that being a church did not exempt the insured from fulfilling contractual obligations, including those specified in the insurance policy.

The court cited Matter of Fuhrer, 100 Misc 2d 315 (Sup Ct. Richmond Co. 1979), which established that the constitutional right to religious freedom and the statutory clergy-penitent privilege do not protect against revealing criminal activity.

The court determined that, according to the fire insurance contract terms, the insurer had the right to examine the relevant documents.

The court ruled in favor of the insurer and against the insured.

The Church of St. Matthew, Plaintiff v. The Aetna Casualty & Surety Company, Defendant. New York Supreme Court, New York County. 202 N.Y.L.J., No. 93, p.25. November 14, 1989. CCH 1989-90 Fire and Casualty Cases, Paragraph 2311.