How much is your church worth?

Few churches or nonprofits ever consider their buildings’ insured value until it’s too late to do anything about it.

By Fritz Hahn and Karlyn Stern

How much is your church worth?

We could answer in many different ways. In a non-monetary sense, a church is of inestimable value. Money can’t create love or community. But in property terms a church, or any commercial building, can be viewed in two ways:

• Real estate market value

• Insurance value

Since we’re an insurance broker, we’ll focus on the second factor. The insurance value of your building is the amount you will be paid in the event of a loss. How much is that?

Now that’s a good question. And it’s one almost no one asks until they wake up one day to find they need a new building. At that point, options are few. The insurer is going to cut you a check based on their formula and that’s that.

But how do they arrive at that amount? Another good question! This is where you come in.

“The insurance value of your building is determined by the documents you submit to the insurer and the coverage options you choose.”

If a sales person filled out everything on your behalf, you may have no idea what these documents say. Yet their content will determine your payout!

Private and government research demonstrates the vast majority of commercial buildings are undervalued for insurance purposes. What does that mean? This: Your insurance payout will be less than your reconstruction budget. You’ll end up in the red.

Don’t let this be you.

What can you do? Plenty.

• Get ahold of the documents you submitted.

• Review them. Are they accurate? Do they reflect building expansions or improvements you have undertaken?

• Do they reflect items of value inside the building and on the property? This could include: closed-circuit TV networks; playground equipment; stained glass or other ornamental or historical fixtures; appliances and office equipment.

Documentation is vital. If it’s not documented, you probably won’t be compensated for it.

Beyond documentation
But documentation isn’t all you need. Planning is required. Your policy needs to fund reconstruction. But before that can happen, demolition and debris removal must occur. Did your policy budget for that?

In addition, construction costs are not static, so your policy must include coverage for inflation and increasingly stringent building and environment codes.

This is a lot to evaluate, but it’s worth the effort. If you suffer a total loss, you want to be able to count on your insurance to make you whole again. But someone has to take ownership in it. If your staff doesn’t have the ability to manage insurance, perhaps volunteers or board members can invest the needed time. And of course we’re here, too.

Ministry Pacific provides free valuation services for its clients and offers a fee-based service to others. You can download our free e-book and schedule a call about building valuations here.