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Updated: Jul 25, 2022

How do I know what isn’t covered by my insurance?

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?  

When you are covered by UMIP, we will be there when you need us. Churches have unique needs. As a part of the denomination, we understand the unique needs of United Methodist churches and their operations, which is reflected in our coverage options. Your ministry deserves outstanding insurance and UMIP works for you each day to help protect your church’s people, property, and finances.

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This content has been prepared by United Methodist Insurance Company (UMI) for informational purposes only. No article or document may accurately contemplate all possible scenarios or church resources. As such, this information is meant to foster discussion by the individual church and its members to develop a plan tailored to its own circumstances. UMI is providing this information with no warranties or guarantees of any kind and it should not be viewed as legal, financial, or other professional advice. All liability is expressly disclaimed. Any claim examples described herein are general in nature, may or may not be based on actual claims, and are for informational purposes only. Any coverage available for a claim is determined from the facts and circumstances of the claim as well as the terms and conditions of any applicable policy, including any exclusions or deductibles. In the event of a conflict with the content herein, the terms and conditions of any issued policy will control. Individual coverage may vary and may not be available in all states.

The commercial insurance coverages for United Methodist Insurance are sold and serviced directly or indirectly by Sovereign Insurance Agency (CA Lic. No. 0B01380) ("Sovereign") and underwritten by various available insurance markets. Sovereign pays United Methodist Insurance a royalty for the use of its intellectual property.


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