III. THE PROPERTY STUDY AND ITS INSURANCE  (the contracted funds can assist with the following):

        A. Special Multi-Peril Building & Contents coverage

1. Special form including theft for building & contents - This form is the broadest type of coverage available and covers perils that cause possible causes of loss which are not excluded from the policy. The two other forms, basic & broad, cover only the perils listed in the policy. All organizations which quality should carry the special form to be sure they are covered properly. It is not uncommon for many companies to offer special form for the building but only basic or broad "named peril" coverage for the personal property. This little error can leave your organization many gaps in coverage.  
2. Replacement cost for building & personal property or ACV - Replacement Cost, the policy type most useful to a church or other ministry.  This provides for the replacement of all or parts of the building or personal property destroyed or missing with new parts or items, of like kind and quality, if the insured value meets the policy co-insurance requirements. There is no deduction for depreciation to either the building or personal property should a loss occur. ***Functional replacement cost - Some organizations are in buildings that are far too large or more ornate and expensive than they may feel they need. In these cases, if the building were to be destroyed, it is most likely that a more suitable and often smaller or less expensive structure would be built. If this is the case with your organization, you would want to have the functional replacement cost of the larger, more ornate structure.  ACV or actual cash value (Market value) a benefit for the average business provided by the tax code, however churches and related ministries do not pay taxes thus this could result in a major loss for the ministry.  When damage to an item or a building happens it is first depreciated then the policy deductible is applied before a settlement is paid.  The Replacement Cost policy type pays for the cost to replace damage less a deductible when settling the claim, a true benefit for a church ministry.   Example a 10 year old roof warranted as a twenty year roof if damaged, is noted with 50% of its life expectancy used, results for a claim payment short 50% or a $10,000 roof would only yield $5,000 less your policy deductible, where as the Replacement Cost policy type would pay the cost to replace $10,000 less your deductible.  Which would you appreciate more as a church ministry.  Most of the time I see church buildings and or their personal property with an ACV type which save premium dollars and sometimes Replacement cost for all claims by for losses by wind and hail.  A true loss for a ministry should a claim happen.  The savings gained on a premium could be very costly should a claim happen.
3. The building & personal property "contents" description  - it is important to understand that certain items you may consider personal property are actually a part of the building, and do not need to be included in the value of the personal property. Your building value should include any “built-in” items such as your organ, altar accouterments, sound system and pews, orany other items attached to the structure . Personal Property "Contents", would include any item that is not attached to the building in any way.  Today it is critical to have a complete up to date inventory of your personal property, otherwise your coverage will only be an average or educated guess by yourself or the agent that could leave you with a large gap in coverage should a loss occur. A quality agent will give you guidance with this important process to assure proper coverage.
4. Replacement Cost Insurance Value - We specifically appraise all structures that we insure for their proper replacement cost value using provided data and collected data which we enter into a software program call Marshall & Swift/Boeckh. This software has become the main accepted tool for determining the standard of value for most all new construction and replacement construction. This has thus also become the accepted tool for determining the replacement values for insuring and claims adjustment by most insurance companies today.  To be assured we are providing the best possible insured value for our clients we have adopted the use of this online software that is updated for construction costs of materials and labor in real time continually for all parts of the country and all types of construction.  We believe a quality agent would do the same to properly protect their clients.  Without an accepted standard of value insurance companies, agents, and policyholders would have no standard by which to know if the insured value is a proper insured value for the replacement cost. Please understand there are certified appraisers that charge a premium for this service but it does offer the added benefit of being certified which we are not as insurance agents. We do use the same software and thus should arrive at similar results. I must point out however, that all appraising is an art and not a science, thus the agreed value amount clause as noted next if included in your insurance plan will take away most of the contention for replacement cost value when a claim should be presented.  With the agreed value clause included in your policy the value is adjust to proper replacement cost at the time of a loss if for some reason it is less in error. The MSB appraisal company software is adjusted daily by zip code for building quality and type.  We assess this by means of their online internet connection which is in real time. If you should have a question concerning the values in our report for your property, please let us know.  We also strongly encourage our clients to have a certified appraisal completed if they feel there is doubt with their values.  We trust you appreciate this added professional value that we offer our clients. The appraisal process should thus determine the value to replace your building on the specific date completed for each component building element in like kind and quality to the best of our ability and judgement.  This value is however, not a certified value since we are not certified for such appraisals. 
5. .Agreed Amount - One of the most criticial policy benefits that should be included in your policy and is usually missing. This option is extremely important to your policy and can wave possible penalties for insufficient insured values at a time of loss.With the agreed value clause included in your policy the value is adjust to proper replacement cost at the time of a loss if for some reason it is less in error. Without it you are obligated to maintain an insurance value on your building to meet a co-insurance amount that is stipulated in your policy at the time it is written for replacement cost or actual cash value (market value).  For example, let’s say that your building has a 90% co-insurance clause, and that you have $600,000 worth of insurance on your building. At the time of loss an appraisal for the adjustment of the claim shows that your building replacement cost is  $1,000,000. By contract you have agreed to maintain an amount that is equal to 90% of the replacement value, which would be $900,000. The amount of the claim paid by the insurance company then becomes a factor of what you should have carried and what you did carry. In this case, the insurance company would pay 60/90 or 2/3 of the claim leaving you with a short fall. With the agreed amount clause included, the claim is paid up to the amount of the insurance value that you carried without a penalty because the endorsed agreed amount increases the value to the proper replacement value.  As appraising is an art and not a science, the agreed amount clause thus takes the contention out of your insurance policy for insured replacement values at the time of a claim. 
6. Co-insurance - It is important to understand that most policies offer a co-insurance limit for the insured value from 80% to 100%.  For a total loss you are left with the amount above the co-insurance limit which is usually stated on the policy declaration page. For a religious organization we recommend 100% because unlike a commercial business which depreciates their property for a tax advantage, the non-profit religious organization does not need this tax advantage. Second, it is important to understand that most religious organizational policies are written for the replacement cost of the building as noted above by the replacement cost definition as opposed to actual cash value or market value because they do not need the tax advantage provided to a business that might use this to their advantage.  Thus it would be proper to state that your policy for your religious organization should have an insured value equal to the stated co-insurance of 100% of its replacement cost. The replacement cost value for most insurance policies, claim adjusters, and insurance company underwriters, is now the standard of value as developed using the appraisal software by Marshall and Swift/Boeckh as discussed above under replacement cost.  If the insured replacement value as stated on the policy declaration page as the insured value is less then the calculated replaced percentage replacement value at the time of loss, your claim may be subject to a co-insurance penalty as defined within your policy in addition to your chosen deductible.  In simple terms you may only collect an amount that is equal to the percentage of the  replacement cost you are insured for at a time of loss.  This possible settlement value could leave you far short of your expectations for your claim settlement.  For those insured for the proper value a settlement is assured to provide the amount of capital to replace or repair the claim damage. Most insurance policy contracts for religious organizations do not offer claim adjustment based on what you paid for a building, or what it may have cost you to build, but by their accepted standard of value for the replacement cost of the building.  Your may have gotten "a very good deal to buy or construct the building, but that is not what your policy contract  has stated for its adjustment base3s for your possible loss.  Example: A building that has a current replacement cost value as developed by MSB of $100,000 but has an insurance policy which states an insured value of only $40,000 for a stated policy co-insurance of 100% and also does not include an agreed value endorsement could save premium dollars, but could have a resulting claim settlement for a $10,000 loss and receive only $4,000 or an amount equal to the percentage it was insured for at the time of loss. (40% of the replacement cost of $100,000)  Some are quick to say"this is our building and we should be able to insure it for what we want or for what we can afford, which happens to be what we paid for the building or what it cost us to build.  However, the person that gave you the "good deal" or the volunteers that helped may not be available when a claim happens or you may not realize just how much the cost for construction has increase in the last few years.  There must be a standard of value accepted by all that fits the policy contract if one is to receive a fair settlement for claims presented.  Most all claims are reviewed by your state department of insurance to see if the settlement followed the insured contract to prevent possible insurance fraud, discrimination, or even wose issues that can result from a "good old boy" settlement that could result in all parties facing insurance graud charges if caught by the department of insurance's review.  Property insuring your building to value may cost you more premium but when you are presented with a possible claim there will be less concern as to whether your will receive the necessary amount to replace or repair the loss to your building.  I have seen the results of improper insurance values for churches that others have insured, which leaves them to languish with the aftermath and financial results.  This is like the father that died leaving his wife and three small children with only a life policy of $3,000 to cover the loss.  His wife and children will pay dearly for this drror of choice. 
7.  Blanket Building & Contents - This takes the policy from a stated value for each building and its contents, to a total value for any loss especially if you have multiple buildings. For example, if you have three buildings and their contents insured for $200,000 each on a standard form, and one burns down, you could receive $200,000 if it were found at the time of loss to be the proper value to meet its replacement cost for both the building and its contents. However, on a blanket form, the total amount of coverage or $600,000 is applied to a loss for any one building.  Therefore, if a building burned down and it was determined to have a replacement cost for both the building and its contents of $240,000, you could receive a check for $240,000, thus covering the insured short fall of insured value. This provides another layer of protection to avoid a possible under insured value claim and its resulting penalty from a policy co-insurance clause. 
8.  Ordinance of Law Coverage - Many political jurisdictions have changed and are continually changing building requirements on new construction. Often times, in order to rebuild after a partial loss, the building commission in your area will require the building to be brought up to code to receive a permit. It is important that you have coverage to fulfill this need. For example you may have to add a handicap access for your building, have different electrical wiring installed or other changes to meet new codes. Most policies are written with a clause that requires replacement with like and quality which would not include this new code change that would result in added expense not covered by your policy. 
9.  Plain windows, stained glass windows and art glass windows - Unless your windows are truly of unusual and expensive value, they should be included as part of the building with the limitation of payment subject only to the amount of the insurance on the building itself. If any of your windows are unusual or of high value, they should be separately scheduled on a fine arts floater policy which will provide coverage for the amount stated for each.  A qualified appraisal would be necessary for this fine arts coverage to be correct. 
10. Clergy And Staff Business Personal Property - Many clergy and staff have musical instruments, computers, art and decorative works, as well as large libraries in the building and in their homes. Under normal insurance policies, protection for these types of contents is often limited to as little as $500. In addition, most homeowner’s forms exclude business personal property as tools of the trade or professional, thus offering little if any coverage.  It is important for you to address this matter at the time your insurance is written. In most cases this coverage cannot be added to their homeowner’s policy, and even if it could, it is much less expensive to add it to the organizational policy.  
11. Extra Expense - At the time of loss it may become necessary for the organization to rent space at another location in order to continue their ministry while the building is being rebuilt. Extra expense provides dollars to offset additional costs incurred over your normal monthly expenses while operating at another location. It also covers expediting expenses such as overtime or air freighting of needed materials in order to complete the job faster.***Loss of tuition - This is a special form of extra expense that relates to schools and off sets tuition losses that may be incurred because you are not able to function while the building is being rebuilt or replaced.
12. Sewer Backup - This simply means that if your sewer backs up, the damage caused is insured and covered. The policy should provide coverage up to the policy limit. (Most policies written today either exclude or limit this coverage.)   

       B. Earthquake - This is written in two different forms and should be considered if you are located in an active area.  It can either be an     endorsement to the Special Multi-Peril Policy or it can be written as a separate policy called a Difference in Conditions form. (There are some variations between the two, but they are ormally significant.)