Houses of Worship Face Extreme Weather

Houses of worship are not immune from the surge of catastrophic weather across the United States that is increasing insurance companies’ caution about what and where to cover. In fact, religious organizations face unique weather-related risks due to the construction and distinctive architectural features of their buildings.

Wind damage from storms is a common cause of loss, with steeples and spires especially vulnerable. The roofs are at risk of damage from wind, hail, or falling trees, or collapse due to excessive snow, strong winds, and torrential rain. Neglect can allow unrepaired leaks to rot the roof’s supporting structure, causing collapse. Given the sloped nature of many houses of worship roofs, obstruction of drains and gutters induces cracking during freeze and thaw cycles.

Many buildings in the U.S. religious market are older or historic in nature, some dating as far back as the 17th century. The increase in extreme weather heightens exposure for buildings that may have deteriorated materials, outdated construction methods, and potential structural issues due to age, wear, and tear. Ornate features found in many houses of worship, such as stained-glass windows, slate roofs, and marble floors, also increase the cost of materials, labor, and construction.

Houses of worship are particularly vulnerable to loss because these buildings may be unoccupied for extended periods of time each week. If water is not flowing for several days, damage from frozen pipes is a concern. Flood and water damage can be very costly to houses of worship, which frequently have finished basements used for gatherings and activities.

Another challenge is loss due to business interruption. When a religious building is damaged in severe weather, the church may lose income from donations/offerings, rental income, and special events.

Insurance companies are gathering more information to assess risk, including to houses of worship. Deeper critical analysis is required to understand the full exposure and to price the exposure commensurate with the risk.

Insureds have long relied on historical data to predict frequency and severity of catastrophic weather. However, this is no longer sufficient, especially given the escalation of extreme weather events such as convective storms, atmospheric rivers, freeze, and wildfire. These perils generate lower- to medium-size losses, but they are more frequent and less predictable than greater perils such as hurricanes and earthquakes.

To address the increasing exposures of houses of worship, insurers are asking more questions to assess risk. In some cases, that means partnering with vendors that provide comprehensive property risk data and hazard scoring. For example, tools such as aerial imagery and computer vision are being leveraged to assess property risk immediately and on demand.

Gathering more information about specific risk considerations enhances pricing accuracy. The more insurers know about a risk, the better they can provide a suitable policy construct with the best terms possible.

When evaluating the risks associated with houses of worship, the building’s level of care and maintenance makes a big difference in coverage and pricing. It’s important for the organization to have the staff and budget for maintenance and improvement, along with regular inspections of critical systems.

Houses of worship can accept higher deductibles to help lower premiums. If taking that approach, the organization should budget for the higher deductible in case of a loss.

For older, more ornate houses of worship, using functional valuation can help reduce premium costs. Restoring a damaged building to a functional condition with materials that might not be identical to the original but are less expensive may mean replacing a slate roof with asphalt shingles or copper flashing with aluminum.

Building replacement costs have risen more than 55% since 2019, so it is important for organizations to review their policies at least annually with their insurance professional. Underinsuring a house of worship can have significant consequences, such as discovering after a loss that a property did not have enough coverage to make it whole.

Coinsurance penalties are one risk of being underinsured, leaving the organization on the hook for a greater share of a loss beyond the deductible. To avoid a coinsurance penalty, the insurance amount should be set accurately and kept up to date with periodic reviews. “Inflation guard” coverage is another way to protect against rising costs of materials and labor, by automatically adjusting limits between policy reviews.

Religious organizations also should ensure proper insurance levels for the valuable paintings, statues, Bibles, communion ware, and intricate stained glass they may possess. Setting a value and specifically listing them in the policy is important.

As the cost of weather-related losses climbs, insurers are asking policyholders to share more of the risks through higher premiums. By making maintenance a priority and regularly reviewing policies, religious organizations can help make their property a more acceptable risk to insurers.