Current insurance can take sting from disaster
Ken Walker, Special to the Recorder
April 22, 2010

Current insurance can take sting from disaster

Current insurance can take sting from disaster
Ken Walker, Special to the Recorder
April 22, 2010

The Memorial Baptist Church in Greenville moved into its rebuilt sanctuary more than two years ago, but the lessons of a $3.5 million arson that also damaged its educational building remain fresh.

Maintaining adequate insurance is a blessing that assures the church if another tragedy were to strike, they wouldn’t have a problem replacing the facilities, said pastor Randy McKinney.

Others aren’t as fortunate.

“That’s what we discovered in talking to churches with similar experiences—their insurance was not up to what it needed to be,” McKinney said. “That’s the unfortunate side for some folks who have experienced what we have.”

Jack Holland, pastor of Barberville Baptist Church in Waynesville, also knows the value of adequate coverage.

An 18-year-old man burned down a pair of two-story educational buildings there in August 2008; authorities originally suspected a faulty ice machine.

Thanks to an insurance payment of just over $1 million, when the church dedicates the replacement — a one-story structure containing nearly 14,000 square feet — in the near future, it will be debt free. That is only one of many reasons churches should carry sufficient insurance, Holland said. “Many churches under-insure and then when they have a problem they can’t cover it,” said the pastor, who has 40 years of experience in ministry.

“Then they go into debt for $500,000. “When it burns, you don’t have a second chance.”

Holland, who has also been a pastor in Virginia, South Carolina and Tennessee, recalls how stunned he was when the blaze claimed all his books, notes and degrees.

He warns other small churches (Barberville averages 90 in attendance) that a similar setback could happen to them. Holland encourages churches to avoid using their buildings for storage to the point they become a fire hazard.

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At a previous church he had to warn a family to remove personal items or they would get dumped during remodeling.

“It’s not intentional,” Holland said. “Stuff creeps up on ’em and takes over. I encourage small churches to look for that. That’s their heritage that’s been handed down to them. Try to see as many things as they can.”

These two North Carolina Baptist congregations are among the 1,800 churches and funeral properties nationwide hit by fire annually, according to the National Fire Protection Association. That amounts to some $98 million in damage.

Arsons aren’t the only source of church fires, said Peggy Cook, support services operator for Southern Mutual Church Insurance of Columbia, S.C.

She said other leading causes are lightning strikes and errant candles from Christmas programs and Advent services. Whatever the reason, fires create expensive and horribly inconvenient disasters.

“A fire loss is going to be so much more of an impact than another claim,” Cook said. “A fire claim or lightning strike is going to damage the church to where they can’t meet there.”

In the case of The Memorial Baptist, it took about seven months after the January 2007 blaze before members could worship in the fellowship hall — and, a year before its water-damaged sanctuary was completely remodeled.

The fire led to the arrest and conviction of a man in his late 20s, who was sentenced to more than 10 years for a series of arsons. The crime prompted the church to enhance security throughout the building.

They added motion detectors, fire sensors, monitors, additional lighting and burglar alarms, McKinney said. These measures highlight a crucial fact when it comes to churches. Despite serious damage from fires, the most costly insurance claims are related to theft, according to Bron Caddell, Sr., manager for GuideStone Property and Casualty, a Southern Baptist agency.

The leading increase in property claims among the churches Southern Mutual insures in a four-state area stems from vandalism to air conditioners.

“They’re stealing the copper so they can sell it,” Cook said. “That’s been a trend we have seen within the last three years. I don’t know the exact cost but I know it’s on the rise.”

Not only do churches face concerns about burglary and vandalism, the possibility of storms is another concern, particularly during the upcoming hurricane season. Hurricanes are one reason premiums are higher along the state’s coastal regions.

No matter what the threat, though, churches are wise to make sure their coverage is up to date, according to McKinney.

The Memorial Baptist pastor attributed ongoing reviews by a longtime member of the property and grounds committee with guaranteeing that insurance paid the lion’s share of its repair costs.

Noting that they also saw the need for additional security equipment, McKinney added, “At the same time, you can go to the other extreme and do too much and it costs you a lot. It’s finding a balance that’s important.”

Memorial’s pastor also advised against trying to cut coverage in a short-term effort to save money on premiums. In addition, congregations need to declare a fair estimated replacement cost of their building and property.

In the event of a major loss, insurers will only pay the face value of the policy, Caddell said. A little-understood feature of many policies is the “coinsurance clause,” said the GuideStone manager. Many insurers add such a clause when they feel a church is undervalued, he said.

Then, if a claim is filed, it will be subject to a penalty that reduces the payout.

“For example, if a claim is valued at $20,000, the insurer may say that due to the coinsurance clause, they will only pay $15,000 because the church declared its building and property replacement value at less than the likely actual fair amount,” Caddell said.