Could your church or charity be underinsured?

Could your building be worth more than your insurance coverage?

The best way to ensure you maintain adequate insurance cover is to have a valuation for insurance purposes by a RICS qualified surveyor every three years. You can locate one near to you using the  RICS find a commercial surveyor tool.

You should also do this following any significant building works. The rebuild value for the building must include demolition, rubble clearance, full rebuild (including materials), and professional fees. You also need to make sure that your buildings cover includes VAT.

Failure to revalue your property adequately may result in underinsurance in the event of a claim, which could lead to a reduced settlement.

The simple inventory exercise that could save you thousands

Contents cover is usually insured on a new for old basis, so the sum insured needs to be calculated using today’s replacement cost, and not just what you think it is worth. It’s a good idea to complete a room-by-room inventory and keep a record of the replacement cost of all contents in each room. It’s OK to combine low value items as ‘unspecified’ (for example, cleaning items could have a total replacement value of £300, or cooking items a total replacement value of £500)

It’s very easy to underestimate the value of contents and equipment, as the costs of seemingly low-value things like books, chairs, and other items can soon add up. It’s wise to keep a written record of this inventory, and update it annually, or when new items are purchased. Make sure to keep evidence of purchase for any new items (including online receipts).

Should a claim arise, then working out and proving your loss is far easier if you have the above system in place.

Are your valuable items protected when they leave the premises?

You should also monitor which items are kept on site, and which are used away from the premises. Contents insurance does not cover items once they are away from the church premises, but you can arrange floating cover between two premises or locations, or all risks cover for items used away, such as laptops, camera equipment, or items used for outreach. These items should not be duplicated under both sections of cover.

Could your liability cover withstand today’s compensation claims?

In a world of rising personal injury claim settlements and legal costs, you should review your indemnity limit. The cover is designed to cover compensation claims and legal costs, as settlements can be substantial. Most policies cover £5 million but higher limits will be available.

Could a claim against your trustees exceed your current level of protection?

Trustee indemnity cover is designed to indemnify the trustees for legal defence and compensation awards for claims made against them personally for alleged wrongful acts. In a similar way to public liability, legal costs can be substantial so you should review your current sum insured to consider if it’s adequate. Policies tend to have standard limits of £50,000 or £100,000, but higher limits will be available for relatively small additional premiums.

Could your organisation survive a prolonged closure after a major loss?

Business interruption and indemnity period cover is designed to cover any potential loss of income and/or additional costs of working following a material damage claim. The sum insured needs to be sufficient to cover these costs, and for the duration of the indemnity period. Typically policies will have a default amount as standard, so you should review this to ensure you will not be financially affected in the event of a claim.

The indemnity period is crucial, as depending on the extent of damage suffered and the type of building you have, it could take several years to complete restoration. Grade I or II listed buildings for example take a long-time plan, obtain required approval and then carrying out sometimes very specialist works.

Expert guidance to help you avoid underinsurance from Kingdom Bank

With a deep understanding of the specific needs of churches and Christian charities, we’re able to support you with expert advice on the cover you need to protect your organisation and those you serve.

We’re more than just insurance brokers: we’re committed to helping churches grow. By arranging your insurance through us, you’ll become a partner in that mission by investing in Kingdom ministry across the country.