Insurance - What Would It Cost to Replace Your Building?

By Robert C. Foreman, Architect, AIA, LEED AP

 

Do you know how much it would cost to replace your building? Replacement cost is something every building owner ought to know because if you do not have enough insurance coverage, you may not be able to rebuild the same size or quality of facility lost in a fire or other disaster. This is only common sense. However, I am amazed at how often we hear of situations where insurance coverage was insufficient. This sometimes happens to institutions other than churches, but churches seem to have a problem keeping their insurance coverage up with actual replacement cost.

If your buildings are less than twenty years old, it will not be hard to find out what it will cost to rebuild. Find out what similar space will cost to build on a square foot basis, calculate your present square footage and then do the math. Notify your insurance carrier that you want total replacement coverage. They may also provide an appraisal service to recommend coverage limits.

What does space cost at current prices? Every facility is different. We suggest you contact a specialist in the design or construction of your particular type of space to get an accurate estimate of replacement cost. Once you have an accurate estimate of replacement cost from a qualified professional, you should add for inflation every year and verify the value every five years to make sure it is still current.

Replacement cost of older buildings will require careful evaluation because codes and standards have changed so much. It is impossible and highly undesirable to just replace what was lost in an older building. What was lost probably did not meet current building codes. Life Safety codes, building codes, handicap accessibility codes, and today’s expectations have caused significant changes in building design, making simple rebuilding of older buildings almost impossible. This must be considered in determining replacement value.

In older buildings, replacement of actual functional space (classrooms, fellowship hall, sanctuary, etc.) will probably require more square footage than was actually lost. Replacement buildings are required to be more efficient, better insulated and have more efficient lighting and mechanical systems. This will mean lower maintenance and operating cost, but higher construction cost than you will have from replacing exactly what you had.

Older buildings may be considered higher risks by insurers and can be more expensive to insure for full replacement value. Rot, structural deterioration, termites, worn out electrical wiring and poorly maintained heating systems can be very hazardous and may be disasters waiting to happen. Older buildings which have serious life safety code problems may also have higher insurance costs due to the increased liability. Insurers know that these problems are common in older facilities and that churches are notorious for poor maintenance and for continuing to use worn out, out of date and even dangerous buildings.

If you need to determine replacement cost, or if you might need to take steps to remodel, upgrade or replace older facilities, you should seek the services of an architect experienced in the planning and design of church buildings.