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Church Property Insurance: Why Churches Need to Avoid the Under-Insurance Trap

Not having enough insurance to replace or rebuild assets after damage or loss occurs following a disaster is known as under-insurance. Although having some insurance is better than having none, if your ministry is under-insured, you don’t have adequate financial protection for your assets.

Under-insurance could have negative consequences. For instance, it can make it difficult to rebuild the ministry in the same way following a disaster. Since religious organizations primarily operate on charity, such scenarios could also leave your ministry out of pocket. Inadequately insured contents may also not get replaced due to lack of funds, potentially leaving you worse off.

Whether or not your choice of remaining under-insured is intentional, sometimes the short-term gain can turn into long-term pain. Even if it’s accidental, under-insurance could lead to losses you’d probably do well without.

How to Ensure You Have the Right Church Property Insurance Coverage?

Sometimes church leaders fail to secure operational interruption coverage because they prefer risking their chances. But in certain situations, they might not be fully aware of the different insurance policies required to keep their religious organization safe.

When a disaster strikes, it could mean not being able to meet costs such as utility bills, wages, and rent. This could also result in the complete closure of the house of worship altogether. Whenever costs are tight, it’s often easier to neglect the right type or level of insurance coverage required to keep the mission afloat. But sometimes, the difference between accurate coverage and under-insurance may only be a matter of a few bucks, depending on various factors.

What it Takes to Secure The Right Level of Church Insurance Coverage

Many church leaders rely on online calculators to determine the value of rebuilding or replacing assets following a disaster.

Sometimes the elemental costing approach is used, while at other times, the basic per-square-meter cost technique is used to calculate the value of various elements in the building. Research by the Insurance Council shows that online calculations resulted in 63% of buildings under-insured in the last year.

When the cost of replacing or rebuilding the assets isn’t accurately evaluated, or you don’t assess the accurate cost of rebuilding all internal and external structures to the same standard, it could result in issues associated with under-insurance. Ensure all the costs of replacing the contents with similar items are also added.

Church insurance broker showing policy terms to a client

Experts recommend avoiding going by the resale or market values because they differ remarkably from replacement costs. Reach out for detailed consultations to ensure accurate sums are set while streamlining appropriate insurance coverage. The value also needs to be indexed annually to factor in inflation. Determining the value of all the contents must also be based on the replacement costs of the objects rather than their depreciated values.

If you need more information or assistance, give us a call! We’re dedicated to helping non-profit organizations and churches get insured by the top insurance carriers in their areas! Our agents work hard to help clients get adequate insurance without skyrocketing premiums.

Whether it’s church property insurance, church liability insurance, umbrella insurance, group health insurance, directors and officers’ insurance, workers’ compensation insurance, sexual abuse or misconduct insurance, commercial auto insurance, professional indemnity coverage, or any other policy, our church insurance agents will scout out the best value under your budget! We’re an independent insurance agency offering services to over 50 states across the United States.  

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