Insurance cover for heritage buildings is "complex and challenging"

Church leaders need to re-build churches for today

Thursday, March 11th, 2021

The decline in church attendance combined with insurance coverage for old and heritage buildings is causing church administrators some concern.

This is particularly the case for heritage buildings where complex issues leave a great deal to consider.

The comments come from brokerage firm Crombie Lockwood.

Steve Walsham, group broking manager of Crombie Lockwood says that many historic church buildings were built to specifications dating back to the late 1800s or early 1900s.

He suggests church organisations would do better to consider practical issues if these structures need rebuilding after events like earthquakes or fire

With church attendance declining over the past generation, church leadership may think of building back smaller to fit the needs of today’s churchgoers, for example.

Insuring heritage buildings to the value of a suitable replacement could be problematic, Walsham says.

He notes many old churches contain works of art such as artisanal stained-glass windows and hard-to-source materials such as native timbers or Italian marble.

The valuation process includes the cost of the time and skill of expert craftspeople to replace them, he says.

While many church organisations are asset-rich, they often lack liquidity, Walsham says.

This means that insurance cover can be prohibitive for many church communities located in high-risk seismic zones.

Local government consents and Heritage New Zealand consultation are additional concerns church organisations need to complete before repair work can begin.

Walsham says completing these phases of the work, may take years. By then, the value of insurance cover may no longer reflect real-world costs once repairs get the green light.

“Then, if you think of an example like a historic hotel or retail establishment, this could also present a need for extended loss of revenue/profit insurance if the building and the business that operates from it have to be closed for a significant amount of time.”

“The subject of insuring historic buildings is an emotive and complex one for all concerned. But through dedicated expertise, solutions certainly can be found.”

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