Whether a building is under construction or completed, churches should always maintain adequate insurance coverage to protect against loss of buildings, facilities and content, experts say.
“We are in a litigious society and there are cases filed against churches,” said Gary Swafford, director of church planting and building services for the Alabama Baptist State Board of Missions.
“Therefore, we need to be sure that we have our administrative bases covered by being knowledgeable about the types of insurance and choosing the ones that are appropriate for our setting,” he said.
Although most churches realize the importance of insurance, many don’t know how much is enough for their facilities, according to Swafford.
“Churches have a tendency to underinsure because they think about what they actually paid for the building instead of the actual assessed value,” he said. ”Think today’s value not value of the past.”
To make sure that churches obtain enough insurance, Swafford advises leaders to talk to their insurance agent and get a second opinion from another agent.
In some cases, Swafford said he advises churches to spend a few hundred dollars and hire a real estate professional to provide them with an official assessment on the value of their property to get a true picture of what their facilities are worth.
Assess entire property
“This insurance assessment will help us consider things that we can do to protect ourselves and our property, even signage, lighting and entrances,” he said. “Being aware of what insurance covers and what they look for can help us to improve the safety of our building.”
For added security, the Georgia Baptist Convention recommends that churches periodically allow an attorney who is knowledgeable in insurance and liability matters to review their coverage.
Before beginning any construction project, Swafford advises churches to verify that their insurance coverage is sufficient.
“Find out what the construction company’s insurance covers and what the church’s insurance covers to make sure that the church is fully covered throughout the entire process,” he said. “Some churches may need to have their insurance agent present to hear what the construction company says is covered.”
Get enough coverage
When possible, Swafford advises churches to acquire replacement value insurance on their buildings and content.
“It is more expensive but churches that have had their buildings burned have sometimes not had enough coverage to replace their loss,” he said.
Swafford added that churches should include liability insurance in their policies to protect them against accidents that may happen on their property.
Georgia Baptist Convention compiled the following definitions from “Foundations of Risk and Insurance” by Emmett Vaughan to help churches through the insurance process:
-Agreed amount endorsement — a provision in fire insurance whereby the coinsurance clause is suspended if the insured carries an amount of insurance specified by the company (normally 90 percent or more of the value).
-Coinsurance — in property and casualty insurance, a clause or provision in an insurance policy requiring a specific amount of insurance based on the value of the property insured.
If the insured fails to comply with the clause, he will suffer a penalty in the event of partial loss.
-Errors and omissions insurance — professional liability insurance for individuals in professions where the exposure is primarily a property damage one as opposed to bodily injury.
-Limits — the value or amount of a policy; the greatest amount that can be collected under the policy.
-Ordinance or law coverage — the insurer will not be liable for the increased cost of construction necessary to bring the damaged or destroyed building up to code standard, unless coverage is added by endorsement.
-Policy — the written contract of insurance that is issued to the policyholder insured by the company insurer.
-Replacement cost insurance — property insurance that pays for damaged or destroyed property without a deduction for depreciation.
-Schedule — a list of coverage or amounts concerning things or persons insured.
-Waiver of subrogation — the voluntary relinquishment of an assignment or substituting one person for another by which the rights of one are acquired by another in collecting a debt or claim.
In other words, if the community boys club used your church for its meeting and it was determined they were responsible for the fire in your church, then the insurance company would just pay the claim and not try to collect the losses from the community boys club.
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