Understanding Business Interruption Insurance for Churches
Business Interruption Insurance (BI) is essential for churches to reduce financial burdens resulting from property damage. This insurance covers various risks like theft, intentional damage, fire, and natural disasters. By carefully assessing potential losses and types of BI cover available, churches can safeguard their financial stability in unforeseen circumstances.
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Presentation Transcript
Business Interruption Insurance We ll always find a space to carry on teaching our children and the staff will keep turning up, so We re a church, not a business, so what s this got to do with us???
What we will talk about Why have BI cover? What sort of damage do I consider when calculating BI? Understanding the different types of BI cover Gross Profit Additional Costs Claims preparation Other Length of cover Quantifying the amount of cover you need
What and Why??? BI insurance reduces the financial burden of operating that may result from damage to your property (damaged property must be insured for material damage in order to claim BI insurance). Assumption that what you are doing is worthwhile in the Kingdom of God Others are depending on you to be there Fiduciary responsibility of trustees E.g. avoiding bankruptcy! Avoid negative financial impact on others Reputation .
What risk do you envisage when you calculate your BI insurance cover? Assumes you DON T start with what you can afford to pay in premiums! Theft because it s the most common? Intentional damage (e.g. someone has broken in and trashed the office). Fire? Flood? Depends where you are. Tornado? Earthquake?
Lesson 1 Work out what the biggest risk of financial loss from one event might be. Lesson 2 Do your homework thoroughly to calculate the potential losses BEFORE you decide how much business interruption insurance you can afford to buy.
Types of BI Cover Refer to policy for definitions Gross profit Additional costs Book debts Claim preparation costs Fines or damages Redeployment costs Severance and redundancy payments Other
Lesson 3 Keep the wording on the schedule simple so that cover is as broad as possible. Avoid any ambiguity! Lesson 4 If you re not sure about BI insurance cover, get advice!
Length of Cover Policy provides for 3 years. You can request more. Which of your operating costs are fixed irrespective of how long you are out of action, and which are ongoing until the damaged item is replaced or repaired? Is your income affected by how long it takes to repair/replace damaged buildings/equipment? Does the impact reduce over time?
How long? Will depend on type of damage, so plan for worst case scenario. Allow for time to obtain consents. In worst case scenario will other organisations be competing for engineers/ builders, etc? Understand your organisation s decision-making procedures.
Lesson 5 Don t underestimate how long it takes for church bodies to make decisions! Take that into account when working out the length of time you think it will take to recover.
Exercises Divide into 3 groups to consider: 1. A parish scenario 2. A diocesan scenario 3. A school scenario
Lessons 1. Work out what the biggest risk of damage from one event might be. 2. Do your homework thoroughly to calculate the potential losses BEFORE you decide how much business interruption insurance you can afford to buy. 3. Keep the wording on the schedule simple so that cover is as broad as possible. Avoid any ambiguity! 4. If you re not sure about BI insurance cover, get advice! 5. Don t under estimate how long it takes for church bodies to make decisions! Take that into account when working out the length of time you think it will take to recover.
