Discover the three most common reasons churches receive property insurance claim denials.
Learn why insurance is protection, but not the answer to prayer.
Your church buys insurance for protection. Like any other organization, your church needs the practical benefits of insurance coverage to insulate it from financial loss. That said, insurance is not the answer to every cause of loss or prayer. If it were, the mechanism of insurance would not be possible. It is very important to understand that an insurance policy is a legal contract between the Named Insured and the insurance company.
We’ve all heard the phrase, “I’ve got insurance for that.” As stated above, insurance does not and cannot cover every imaginable loss. All insurance policies contain policy provisions and conditions, as well as exclusions. Hopefully, your church board is working with an independent insurance agent to help evaluate your particular exposures and provide guidance in understanding what insurance does and does not cover. The following three reasons are the most common property insurance claim denials churches receive from insurance companies:
- Wear and tear/maintenance. This frequently involves deferred maintenance issues, such as peeling paint that exposes wood to rot. Another example is loss due to inattention to older roofs in which roof integrity has been compromised by a lack of proper repair or replacement. It is important to understand that property insurance is not a maintenance contract. In simplified terms, think of property insurance as protection from unexpected, sudden and accidental damage due to a covered cause of loss. If your roof has curled shingles or gravel has worn off the roof shingles, and your church experiences water intrusion due to the wear and tear of the roof, your property insurance claim will most likely be denied.
- Continuous or repeated seepage or leakage. This ties in with what is explained in 1) above. Some other warning signs of this kind of problem are stained walls or ceilings. It is the insured’s responsibility to properly maintain its property and buildings. This involves regular walkarounds and inspection of all church properties. Aside from an aged or compromised roof being a source of continuous water seepage or intrusion, other problem areas may be loose trim, caulking that has split or deteriorated, or leaking faucets/plumbing.
- Faulty workmanship. There is no coverage in any property insurance policy for loss due to faulty workmanship. It is a good rule of thumb to work only with contractors licensed in your municipality for items such as structural, roofs, plumbing, electrical, concrete. Doing so may allow some available recourse from the standpoint of invoking the municipality’s licensed contractor bond.
If your church experiences a property loss, its first obligation is to take reasonable measures to prevent further damage. Immediately thereafter, contact your insurance company and/or independent insurance agent. They will guide you through the claim process and answer your questions. The church should always document the correct date of loss.
Richey-Barrett Insurance is your Trusted Choice Independent Insurance Agent for church and non-profit organization insurance. Contact us to discuss your concerns and insurance program.