Canadian Underwriter

Coverage for religious buildings

November 3, 2015   by Sara Tatelman

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Sometimes God is with you.

Built in Winnipeg, the Midnight Sun Mosque had to cross three provinces and one territory to reach its final home in Inuvik, a small Northwest Territories town 200 km north of the Arctic Circle. It survived the insured semi-trailer ride to Hay River, N.W.T.—despite having spent two days as a sideshow attraction in an Edmonton truck stop, secured only by a two-by-four jammed across the door—followed by a barge trip down the Mackenzie River. And God kept smiling on the little mosque on the tundra, even though nobody would insure it for the two months between its arrival and its consecration. Through it all, it was spared fire, flood, locusts and vandalism.

The company that moved the mosque from Inuvik’s port to its final destination had “never done something like this,” says Hussain Guisti, general manager of the Zubaidah Tallub Foundation, which paid for the mosque and its voyage. Guisti had to sign a waiver absolving the movers of any responsibility should the mosque be damaged. Plus, no insurer would cover the building between when it arrived and when it was connected to the water and sewer systems. And when insurance finally became available, it cost the Foundation $6,000 a year.

With the Midnight Sun Mosque complete, the Foundation’s now hard at work on a new project—an in situ constructed mosque in Iqaluit, Nun. Based on the trouble-free move, they’re considering leaving the new structure uninsured until it’s completed, even though coverage is available. “We didn’t take it up in the Inuvik mosque,” says Guisti, “and I tell [the broker], let’s just think about it, because $9,600 is a lot of money.”

Many brokers recognize religious buildings don’t always have funds to buy the most comprehensive policies. “…You’re dealing with ministry dollars and you’re dealing with donations that are their revenues,” says Andrea Wingfield, the manager of Brokerforce Insurance’s Sanctuary Plus program in Toronto. She works with churches, missions and other related facilities like religious schools; and while budgets can be tight, she stresses it’s essential to have the right insurance.

St. Elias the Prophet Ukrainian Catholic Church in Brampton, Ont. would know. The pastor suspects that after a Friday service in April 2014, embers weren’t properly disposed of and so the domed wooden church burned to the ground. The pastor declined to be interviewed but the church’s website addresses insurance issues. “Actually, we were underinsured— the coverage was not indexed over the past 10 years and we were short at least 25 percent,” the site reads. “… If we are very careful, using the resources in our parish, this, plus what was allotted for the contents, might almost be enough to put up the walls. But the contents, the iconography, the books and sacred vessels—without donations from the community, the interior of the church could be quite bare for years to come.”

Gimme that old-time insurance

It’s too late for St. Elias, but there are ways cash-strapped congregations can find appropriate coverage, even beyond discounts for claims-free histories and up-to-date alarm systems. One tactic, says Wingfield, is reassessing liability limits; so if a congregation has 20 parishioners and a $10-million liability policy, it has the option of switching to cheaper coverage.

For those seeking more affordable but less comprehensive coverage, “we look upon the reasonableness of the request,” says Jeff Brown, president of PL&B Insurance in Edmonton. He won’t issue a $1-million policy for a temple worth five times as much, since it’s both unfair to the client and leaves the brokerage open to negligence claims, but “there’s always a little bit of discrepancy in terms of rebuilding cost.”

There are many “examples of places of worship where the insured value and the replacement costs were several million dollars apart,” says Colin Robertson, vice-president of operations and risk control at Ecclesiastical Insurance in Toronto. “The insurance can only pay as much as the contract specifies,” so underinsurance could leave congregations with some steep shortfalls.

Brokers can also break down building value costs. “These aren’t… figures that are magicked up out of the air,” says Robertson. For replacement costs, Ecclesiastical consults organ builders and others who know what church goods cost, and then shows clients the math: insuring X square feet of stained glass worth Y dollars per square foot costs Z dollars a year. One church Ecclesiastical insures “had stained glass installed by a German studio after the First World War, and to replace that would run into millions of dollars.”

Congregations with highly ornate buildings, Robertson says, often accept more comprehensive insurance once they understand how each window and communion plate fits into the valuation.

If there’s no other solution, Andrea Wingfield’s team “can take a commission cut to try and help the clients in any way possible,” she says. “We do it often, if it’s a matter of making sure a client has the coverage they need and dealing with budget constraints.”

Congregations have to deal with bad weather an awful lot, but the most expensive claims involve negligent contractors and arson. “…These buildings are high profile in the community,” says Robertson. “…And they’re not always used.” Churches, for example, often have basement wells, external staircases, accessible roofs and other nooks and crannies where vandals can easily hide. “So for a variety of reasons, they do lend themselves to being targets from an arson perspective. And sometimes, it could be a hate crime.”

Brokerforce’s Wingfield agrees, though sometimes churches are targeted because they’re big, empty buildings. “It’s always sad on our end when we hear about it,” she says, “because it’s hurtful to the people who are running the ministry… They’re trying to be a place in their community that offers hope and refuge, and [then] they come in and find their windows smashed or something painted on the side of their building or all the taps on the outside of the building turned on to flood the basement.”

To minimize vandalism, congregations should use their places of worship as much as possible. Having the lights on and people around will discourage vandals looking for easy targets, and congregants will notice if anything’s amiss right away. Plus, the site “becomes a focal point of the community,” says Robertson, “and the community will have a vested interest in the building and then it becomes some kind of self-policing for it.”

Congregations can also rent out extra space during the week, he adds, but should ensure third parties like Scouts Canada and independent daycares have their own liability protection in case they damage the building or anyone attending a meeting gets hurt.

Coverage marches on

So while temples need similar property coverage to homes or businesses—like any building, they’re at risk for lightning strikes and burst pipes—limits should be higher to cover the kinds of attacks unlikely to afflict homeowners. Plus artifacts cost a pretty penny. Torah scrolls can cost $50,000, says Robertson, and large pipe organs can run upwards of $1 million.

But it’s not always necessariy to insure everything for its full replacement value. If traditional organ music is important to a congregation, they should fully insure the instrument. But “if the [organ] was installed a hundred years ago and it’s never played,” says Robertson, “if the building’s destroyed or the pipe organ’s destroyed, you might want to replace it with a piano. So you don’t necessarily want to insure it for a million dollars. You might want to insure it for thirty thousand dollars.”

For the BAPS Shri Swaminarayan Mandir, a Hindu temple in Toronto, insuring to replacement value is essential. Built according to traditional Hindu architectural rules, it consists of 24,000 pieces of hand-carved limestone and marble. The stone “came from Italy, it went to India to be carved and then it was shipped back to Canada and basically assembled like a big jigsaw puzzle,” says Robertson, whose company insures the temple with Gellatly Insurance in Toronto. For such buildings, he says, generous limits are necessary, given the source of the materials.

Of course, the physical building is just one element of a congregation’s insurance plan. They must also consider coverage for physical and sexual abuse, especially if they run daycares, youth groups or Sunday schools. Wingfield’s firm offers abuse prevention training, in which client churches learn best practices in working with kids, such as properly screening staff and volunteers, enforcing police check requirements, tips for escorting small children to the washroom, and how many leaders are needed for Sunday school versus an overnight camping trip. Churches are eligible for $100,000 abuse liability coverage for no extra premium, but they need to complete the training, screen staff and volunteers and implement an approve abuse and harrassment protocol if they want to increase that limit. Other religious organizations like schools must be trained before buying any abuse liability coverage.

Churches offering peer-to-peer counseling also require specialized liability coverage. “So within religious organizations,” says Wingfield, “what happens a lot is you have pastors, you have ministry leaders, you have Sunday school teachers who meet with people to offer religious counseling but aren’t being paid as a licensed counselor for their services.” So if a congregation member self-harms after a session and sues the counselor, for example, peer-to-peer liability insurance would cover legal costs. A licensed therapist employed by a church or anyone a congregant pays directly, on the other hand, would need an E&O policy.

Ecclesiastical policyholders don’t pay deductibles for any general liability or abuse claims, since the insurer doesn’t want them thinking their legal fees will cost less than the deductible and then trying to deal with those lawsuits on their own.

“When you’re talking about bodily injury or allegations of physical or sexual abuse,” says Robertson, “… we would want to know as soon as that allegation is brought forward to the insured.” After all, God helps those who help themselves.

This story was originally published by Canadian Insurance Top Broker.