Property Insurance

What is Property Insurance?

As a ministry, your physical property is likely one of your most significant investments. Protecting your buildings, contents, and income with proper insurance coverage is crucial to ensure that you can rebuild and continue your mission in the event of a catastrophic loss.

Property insurance is a type of insurance that can help your ministry recover from damage caused by fire, lightning, wind, hail, and other physical perils.

Taking a holistic look at your property and finances

Effectively insuring your church facilities and finances should involve a comprehensive approach. We recommend considering all these categories when reviewing your ministry’s insurance policy:

Covering Your Facilities

For most ministry insurance policies, insuring your facilities represents the bulk of the cost to the insurance policy. The valuation method you use for your property has a big impact on the price of the premium:

• Actual Cash Value (ACV): The cost to replace the damaged or lost property, minus depreciation.
• Replacement Cost (RC): The cost to replace the damaged or lost property, without deducting depreciation.

Typically, an ACV-based valuation will cost less premium than an RC valuation basis because the building limit will be lower when subtracting depreciation. Your broker can help you decide which valuation is best for your organization.

Covering Your Contents

Imagine that you were to pick up your building and flip it upside down. Most physical items not fixed in place, such as furniture, song books, office equipment, etc. would be considered your building contents.

Most ministries don’t maintain an accurate valuation of all their property. This can make it challenging to insure your building contents for the right amount.

If you do not have a solid estimate of the total value of your building contents, your broker or agent will assume this value to be a percentage of your total building value. For example, if you calculated your contents as 20% of a 1 million dollar property value, you’d purchase $200,000 worth of contents coverage.

This valuation heavily depends on the unique needs of your ministry. High value items, such as computers, fine art and audio-visual equipment should be considered as well when purchasing coverage. Don’t make this decision before discussing it with your broker or agent.

Protecting Your Income

You want the peace of mind knowing that if catastrophe strikes, your ministry can rebuild. But have you considered how your ministry would remain operational during the restoration phase?

Catastrophe can disrupt your finances in two ways: decreased giving and increased expenses.

• Decreased Giving: If catastrophe were to strike, and Sunday services were postponed or moved to a new location, you could see a dramatic drop in earnings if attendance dropped. Loss of Earnings & Donations coverage can cover your ministry for lost income until regular operations resume.
• Extra Expense: If catastrophe were to strike, your ministry may take on additional expenses to resume operations, such as renting a new location or purchasing a tent for outdoor services. Extra Expense coverage can cover these unexpected expenses until regular operations resume.

Earnings & Donations and Extra Expense Coverage work together to protect your ministry from unexpected disruption. When deciding on the amount of coverage, be prepared to discuss factors such as your monthly income and number of employees with your agent or broker.

Protect against Red Tape

Many ministries have occupied their facilities for several decades. Therefore, if disaster were to strike, the ministry would need to update the facilities according to current ordinances and building codes. Local ordinances and laws can create these additional costs:

• Value of Forced Demolition: Many cities enforce building codes that force property owners to tear down undamaged sections of the building if damages reach a certain extent (in California this is typically 50%).
• Removal of Forced Demolition: If a building is forced to be torn down, additional costs will include the removal of debris from the property site.
• Code Upgrades: Rebuilding after a loss may be more costly than anticipated when the replacement facility is constructed to the current city code. These ‘ordinance upgrades’ can place a particular burden on ministries occupying older facilities.

Adding Ordinance & Law coverage to your property policy can fix this risk management need, and help avoid tens of thousands of dollars in additional property costs. Make sure to discuss O&L coverage with your agent when purchasing property coverage.

Next Steps

In conclusion, Property Insurance is an essential protection for your ministry. Review your property policy with a local broker or agent to make sure your finances and physical assets are adequately covered.

Worried about the cost? A ChurchWest Ministry Insurance Advisor can bundle your Property Insurance coverage with other ministry-specific coverages as part of a comprehensive insurance package. By bundling your coverage with ChurchWest, you can get the best protection at the most affordable price.

Click the “Get a Quote” button at the top of this screen to contact your local advisor, or explore our other coverage pages to learn more about guarding your ministry’s finances and reputation.