Ask The Expert: How do I know what isn’t covered by my insurance?
Being aware of possible limitations of your insurance can make a big difference should the unexpected occur.
Having the right insurance is extremely important to help protect your church. When you secure your coverage, you likely have a good understanding of what your policy covers. However, it can be just as important to understand what your policy does not cover. Being aware of possible limitations of your insurance can make a big difference should the unexpected occur.
Here are some key items to consider when thinking about extent of your coverage:
1. If you have questions about your insurance, check with your insurance agent or carrier.
2. Keep a copy of your church’s policy in a safe place to reference as needed.
3. Review your policy. Certain perils (causes of loss) and damages that result from a loss may not be covered and some may be covered only in certain circumstances. Additionally, the covered amount from a specific damage incident may be limited.
4. There are three common areas where there may be claims issues relating to possible lack of coverage. These areas include water, wear and tear, and actual cash value versus replacement cost value.
Water- Perils relating to flooding or water/sewer backup are not typically covered by a standard commercial insurance package. However, in some cases additional policies or endorsements may be purchased to add coverage for these perils.
Wear and tear- Standard policies generally do not cover normal wear and tear to property or routine maintenance issues. It is typically the responsibility of the property owner that proper maintenance is completed and wear and tear is repaired. While this upkeep can create additional work, it could help prevent your church from experiencing a total loss in the future.
Actual cash value versus replacement cost value - Always review your policy to determine if actual cash value versus replacement cost value applies to your property. Many policies are actual cash value and it is important to understand the difference between the two options. Actual cash value is the depreciated cost of property. Replacement cost value is the cost to replace the piece of property with similar kind and quality. For example, a new television may have been purchased for your church several years ago. However, think about what might happen if an incident occurs tomorrow that damages the television. If that television is covered by actual cash value, you will receive the depreciated cost from your insurance. This may not be enough money to buy the same kind of television new today. Although, if you do have replacement cost value for your insurance, you would likely receive enough money to purchase a new similar television. It is important to note that there are many different reasons why a policy may or may not be actual cash value. Sometimes you are able to purchase enhanced policies to get replacement cost value. As previously mentioned, check with your insurance agent or carrier to learn more about your coverage and available options.
Questions about insurance for your church?
The United Methodist Insurance Program (powered by our agency partner, Suracy Faith) is happy to answer questions about property and casualty coverage for your church.
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