Just like you ought to get a medical checkup regularly, you should get an annual insurance checkup to make sure that both your building(s) and insurance program are fit and free of any looming dangers.
Given the recent meltdown on Wall Street, it’s possible that insurers may get pickier about which churches they’ll insure in 2009 and raise their rates. It may not happen, but you want to be in a strong position just in case it does.
How Much Insurance Do You Need?
What would it cost to rebuild if your church (or other buildings) and all the contents were destroyed by a fire, flood, earthquake, tornado or other disaster?
If you haven’t had an appraisal in the last few years, you really don’t know, as construction costs have zoomed in recent years. And if you’ve put on an addition or have completed a major renovation, you’ll need an appraisal. Hire a qualified appraiser who can tell you what the building is worth today. (If you have valuable stained glass, you’ll need a separate appraisal by a specialist, since general appraisers aren’t qualified to value it.)
Once you have an objective number, you can buy the right amount of coverage. While it’s best to insure for 100 percent of appraised value, if that puts a strain on your budget, you can go down to 90 percent if necessary.
It can be hard to determine if the pews are included in the appraised value. For instance, if the pews are fixed, they are included; but if they are movable they should be considered as contents and insured as such.
Take an inventory of your property, including photos of valuable items, and store it in a safe place, such as a safe or safe-deposit box. If there is a loss, you’ll be able to document it when you file the claim with your insurer.
Your church should consider obtaining coverage under a commercial package policy that will provide coverage for property, liability, crime, equipment breakdown, directors & officers liability and business automobile. The church will also need workers’ compensation coverage for its employees. Most insurers that offer a special program for churches provide a complete package; others may not. Churches are exposed to new risks all the time, so you don’t want to be caught short.
Safe, Not SorryMaking sure you don’t have any safety hazards—accidents waiting to happen—is vital. The time to find out about them and correct them is before the insurance company finds out about any deficiencies. Otherwise, you could be facing a rate hike or your insurer may even decline to renew your policy. Big churches, in particular, are more likely to be hit with lawsuits because someone who has been injured (or claims to have been injured, libeled or unfairly fired) will believe that you’re well insured and may be an easy source of money.
So get an annual loss-control survey by a safety engineer. Some insurance brokers provide this as service to their clients. If your broker doesn’t, it’s worth hiring an independent consultant. You’ll need an experienced, qualified person who’ll look over your property from top to bottom, both inside and out, to unearth any current or developing problems.
Insufficient egress is a fairly common problem in churches. You need sufficient exits for parishioners to get out of a packed church in case of fire or other disaster.
Trip-and-fall hazards can easily develop. It could be a cracked sidewalk caused by a growing tree root. Extension cords snaking across the floor in activity rooms is a common problem, especially in older buildings with insufficient outlets. (These cords can be a fire hazard too.) Garden hoses outdoors are another tripping hazard. Lack of handrails in stairwells can spell disaster, especially for an elderly parishioner.
Use sprinkler systemsIdeally, your church should have a sprinkler system since churches have flammable contents, such as polyurethane-coated woodwork, even though financial restraints can make installation difficult. The sprinkler system must be monitored at a central station since an unmonitored system could produce great water damage than a small fire.
Newer churches have utility systems that meet current code. However, many churches are older buildings with old wiring that could potentially overheat or short and cause a fire. Older churches have many hidden nooks and where a small fire can smolder unnoticed for hours. They also often have heavy stone or masonry walls that can make rewiring a tough, expensive job.
While replacing old wiring can put a crimp in your budget, it will have to be done eventually, so it’s better now than later. If it isn’t feasible to replace old wiring right away, at least get rid of all 30-amp fuses and replace them with 20- or 15-amp fuses, or better yet, with circuit breakers. Minimize use of extension cords and strip outlets; replace all frayed wires.
All churches should have a hard-wired security system to detect smoke and break-ins. The system must be connected to a central station manned 24/7 by staff who can alert the fire department or police immediately. Otherwise, a break-in or fire might not be noticed for days if the church isn’t in use. Many national and local companies provide central security-alarm monitoring, and the cost is modest, particularly in light of the insurance savings.
Many safety hazards, like extension cords and handrails, can be corrected at little or no cost. Some deficiencies, like lack of a sprinkler system, are expensive to correct—perhaps money you don’t have. If the problem is an expensive one, a safety engineer can often recommend a sensible compromise — a solution that should improve your risk profile and keep your insurer happy without draining your treasury. For instance, installing a central-station fire alarm system would most likely be less expensive than installing sprinklers.
Insurance and risk management are a continuing process. With a sound annual review, you can feel confident that you’re doing best job possible to reduce the chance of loss and fully insure your risks — especially the major ones.
Gloria Fisher is Assistant Vice President in charge of the church program at E.G. Bowman Company, Inc., a full-service commercial insurance brokerage and loss control firm in New York City that has insured churches for many years. [egbowman.com]
