Church and ministry insurance, which is usually off the media’s radar, has recently made headlines. Why?

There are three main reasons church insurance is making news:

Some insurers are reconsidering covering churches in specific states or pondering leaving the market completely. They’re experiencing too many losses.
Church rates are increasing nationwide as insurers seek to compensate for industry-wide losses.
One church insurer experienced a credit downgrade from a major ratings agency and another company is under review.

What it means to you
Insurers are increasingly seeking to reduce risk. As a result, churches and nonprofits can’t take for granted that their policy will be renewed or that another company will take them on. Organizations need to demonstrate they are actively working to reduce risk and are therefore an acceptable risk for insurers.

So where do you start?
A general suggestion to reduce risk sounds daunting. So where do you begin? We suggest beginning with these three actions:

Updating your building valuation
Improving child and youth safety
Proactive facility maintenance

Update your building valuation

Building valuation does not mean the real estate market value of your building. A valuation is the amount for which your building and its contents are insured. Your insurance policy does not promise a specific dollar amount (that would be impossible given the constant fluctuation of prices in material, labor and other costs). Instead, an insurance payout is calculated using the data the church has provided to the insurer.

Church building valuations should be updated and reviewed consistenty.

“ Ideally, your insurance building valuation should equal the cost of reconstruction. ”

Unfortunately, the vast majority of commercial buildings (including churches and nonprofits) have a building valuation significantly below the cost of reconstruction. Why? Possibilities include:

The church signed insurance documents years ago, then never reviewed them again.
Updates to a building, such as window or roof replacements, expansions or enhancements, have not been reported to the insurer.
The policy has not been updated to reflect changes in the cost of rebuilding in today’s economy. This includes inflation, permit fees, demolition and debris removal and the cost of more stringent codes.

If you are not insured for the cost of reconstruction, you will come up short when it’s time to rebuild after a loss.

What can you do?
If you are a Ministry Pacific client, you can request a free building valuation. If you are not a client, you can request one for a fee. You can also learn more by downloading our free e-book or watching our webinar on building valuation.

REQUEST VALUATION

Child and youth safety training

Sexual abuse is the leading cause of litigation against churches. What can be done? The remedy is a combination of continuous training, background screening and policies prohibiting a singular adult from being alone with children. Ministry Pacific recommends MinistrySafe for training, screening and model policies. Your goal is to create an environment that is so safe and transparent that credible charges cannot be brought. In addition, you can watch our free child safety webinar and download our children’s ministry safety checklist.

GET RESOURCES

Proactive facility maintenance

There are two approaches to facility maintenance:

“An ounce of prevention is worth a pound of cure.” – Benjamin Franklin
“If it ain’t broke, don’t fix it.” – Bert Lance

Nonprofit organizations seldom have a surplus of money. As a result, tight budgets can tempt leaders to put off preventative maintenance and wait until pipes explode, potholes deepen and doors fall off their hinges. With all due respect to lean finances, this could be characterized as penny wise and pound foolish. Why?

A facility failure – such as a frozen pipe bursting – can shut down activities until repairs and restoration are complete. That process may take months.
Facility damage can create ongoing hazards, such as mold, exposed wiring and unstable surfaces.
Although insured, you will still have to pay a deductible.
When claims are filed, it’s likely that insurance rates will increase.
The entire process of crisis response, filing a claim, finding a contractor and supervising the job pulls personnel away from their day-to-day work of ministry and community service.

The alternative is to regularly inspect and maintain facilities. Key areas to focus on are: