If your church is destroyed, could you rebuild?
Congregations want to be able to count on their insurance in the event of a catastrophe. Churches and nonprofits need to make sure their building’s value is accurately reflected in the information they’ve provided to their church insurer.
you need to know your building’s insurance value before a crisis, not afterward. make sure you’re coverage amounts are enough to replace a lost building.
It’s a memorable day in the life of your church. And not in a good way.
When the phone rings, a fire chief is on the line to let you know your building has been destroyed. It’s a day you never thought would come.
After making sure no one was hurt, your next thought is likely insurance. “Where is that policy? What does it say? Am I covered? For how much?”
At Ministry Pacific, we don’t want the answer to be a mystery: It all starts with the value your church assigns to your property. The insurance premium is then based on this number.
Church building values
Your building valuation is the key factor in determining your insurance payout if your facility is damaged or destroyed. (For clarity, the insurance industry uses the term Reconstruction Cost Estimate when discussing building valuations). We’ll keep it simple here.
“A building valuation is the amount for which your building and its contents are insured. ”
This amount is determined by multiple factors, including your building’s size, number of stories and unique architectural features. In addition, the valuation should incorporate property that’s not part of the building itself (called business equipment). You could also refer to this as “non-structural items.” These are usually mounted to the building and can’t be easily removed. Examples include stained glass, pipe organs, pews, audio visual systems and solar panels. All of these are included as part of the building value.
A building valuation is not set in cement. If your church expands, then your valuation needs to be updated (and filed with your insurer) to reflect this. In addition, market factors such as the cost of materials and labor will impact your building’s replacement value.
The problem of undervalued church buildings
Our experience, government data and private studies show the vast majority of church and commercial buildings are undervalued for insurance purposes.
Here’s a hypothetical example. A property insurance contract has been written based on a building valuation of $700,000. After the policy was written, a new wing was added and several rooms were renovated. But these changes were not communicated to the insurer and the policy was not updated to reflect them. The actual replacement cost was now more than $1 million (these numbers are for illustration purposes only). In this case, an inaccurate and incomplete building valuation did not prepare the church for all of the costs associated with rebuilding. Its construction budget fell short by $300,000. For most churches and nonprofits, that’s a lot of money. Unfortunately, this is a common problem.
The cost of rebuilding includes much more than bricks and mortar. Elements beyond the physical structure include:
Higher costs resulting from updated building codes.
Expenses related to complying with expanded environmental regulations.
Increased labor and materials costs.
Renting a facility while your building is repaired or rebuilt.
Removing debris.
And more
An insurance contract that does not account for these and other factors will leave an organization scrambling to survive the loss of its building.
There is good news
We can plan ahead to ensure we have the coverage to fully rebuild. That’s where our free eBook comes in. We invite you to download the Church and Nonprofit Facility Valuation Guide. Then contact our non-commissioned team for a free consultation about your building’s value. We’re here to serve you.
Schedule a building valuation
Get more information about making sure your building is accurately valued.
1.866.870.2700
key topics in church building valuation webinar
Rebuilding Faith: Navigating Church Building Insurance Challenges
The Insurance Valuation Crisis: Are Your Church Assets Covered?
Hidden Costs of Reconstruction: What Every Church Needs to Know
From Damage to Design: A Guide to Church Reconstruction Planning
Building Resilience: Addressing Insurance Gaps for Churches
Church Reconstruction 101: Understanding Costs and Codes
Proactive Protection: Strategies for Church Insurance and Reconstruction
Navigating the Complexities of Church Building Insurance
The Financial Risks of Underinsurance: Safeguarding Your Church
Planning for the Unexpected: Church Reconstruction in Today's Economy
Sequence of Topics Covered in the Webinar: “if your church was destroyed, could you rebuild?”
Introduction
Host introduction (Roy Harryman)
Guest introduction (Parker Young, President of Straub Construction)
Topic overview: church rebuilding after destruction
Importance of Insurance and Building Valuation
Critical factor: insured value of the building
Common issues within the faith-based and nonprofit world regarding insurance
Importance of updating insurance documents regularly
Challenges of Reconstruction
Realization of undervalued buildings (70% statistic)
Impact of inflation and rising construction costs
Difficulty in managing reconstruction costs
Costs of Reconstruction
Hard construction costs vs. ancillary costs
Debris removal and hazardous materials (asbestos, lead)
Design and permitting costs
Changes in building codes and regulations over time
New requirements for energy efficiency and accessibility
Proactive Steps for Churches
Recommendations for regular evaluation of building values
Importance of having a trusted construction partner
Planning for potential cost escalations
Project Timing and Duration
General guidelines for reconstruction timelines (design, permitting, construction duration)
Impact of being undervalued on starting construction
Business Interruption Insurance
Overview of business interruption insurance and its benefits
Examples of alternative meeting arrangements for churches during reconstruction
Conclusion and Key Takeaways
Importance of starting the process of building valuation and reconstruction planning
Need for transparent communication with construction partners
Encouragement for churches to reach out for support and re-evaluation of building values