Counting the True Cost of Rebuilding Your Church
- UMIP
- Oct 23
- 2 min read
Functional replacement value is often considered when a church would not rebuild or repair to the same quality of materials or size of building. You also may not wish to rebuild in the event of a total loss.
This type of valuation does present some challenges and things to consider:
You must seek the approval of your Annual Conference due to the Trust Clause.
Not all carriers are eager to provide the coverage.
There is no standard form so you must be even more careful to read and understand the coverage and terms provided by the policy.
Make sure that the savings justify any potential downside. This is often not the case.
You should have an understanding of how you would replace your building and a good idea of the cost involved in your rebuild.
Understand the effect (if any) the policy will have on the reimbursement of partial loss.
Things that may favor functional replacement:
You would not rebuild to the same size or type of building.
You would not rebuild after a total loss.
You would not want to stay in the same location.
More expensive items in your church (plaster walls, oak pews, architectural features, etc.) are not important to your ongoing ministry.
You have a lot of deferred maintenance.
As always, work with your agent. It is important that you have an agent with experience in using this valuation method. If your agent does not, consider finding an agent that does. You should also consult with an appraiser, architect, or contractor to have some basic plans laid out for what you would rebuild to ensure that you have adequate limits.
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.
