Overview and impact on COSIS servicing arrangements (Updated 12th June 2020)
12th June Update - Extension of period of grace on unoccupancy due to COVID 19
The 90 day period of grace provided by Aviva, during which they agreed not to consider buildings closed purely due to the impact of COVID 19, is due to end shortly. We have however now been advised that they have extended this period for another 45 days. The period of grace on unoccupancy should therefore not come to an end until several weeks into Phase Three of the Scottish Government’s COVID – 19 Route Map, assuming it proceeds with no set-backs or interruptions. See link to Aviva announcement below.
The Church of Scotland has also issued its guidance on the re-opening of church buildings following the COVID – 19 lockdown and this can be found at the link below.
Generally speaking insurers are not looking to become involved in the detail of re-opening buildings as long as the process is being carried out in line with the Government’s COVID 19 regulations and with appropriate health and safety processes and risk assessments in place. There are however a number of things that congregations should consider in respect of their insurance when deciding how best to manage their risk during this period.
- The position is fluid and could change between now and the end of the current extension. Please continue to monitor both this web page and the Church of Scotland website for the most up to date information.
- Aviva have indicated that they will take a positive view when considering whether a church building might be deemed to be occupied. Any regular service, including online broadcasts, funerals, and public prayer, is likely to be sufficient to allow the building to be considered to be in operation again.
- As a rule of thumb, for insurance purposes, having some form of service once a month will generally be sufficient for a property to be considered occupied. Whether you are able to open your building will however be dictated by your specific circumstances and should be governed by the procedures outlined in the Church guidelines linked above.
- Some congregations will know that their church buildings will continue to remain closed for a significant period even when they are allowed to re-open to under the Scottish Government’s regulations. If your property will remain closed beyond the 1st of August you must contact COSIS as Aviva’s announcement makes it clear that it is unlikely that there will be a further extension. Your property will therefore be considered unoccupied and might suffer significant restrictions in cover and increased premiums. Please note that occupancy is material information and there is an obligation to declare this to your insurer.
- If your property is at risk of being considered unoccupied at the start of August then you will require to carry out inspections once a week to make sure that all is well and there is no damage to the property. A note of these visits should be retained along with an indication that no damage or other issue has been identified. Most congregations are currently carrying out some kind of inspection but you may need to increase the frequency depending on the current system you have in place.
- Whilst, as noted above, insurers are generally happy for congregations to proceed within the regulations if you have an issue specific to your congregation that is material to your insurance risk please contact the COSIS team to discuss whether it needs to be referred to Aviva.
I hope this provides some clarity on the position on unoccupancy of church buildings in the run up to churches being able to re-open but suggest you monitor this website for updates. In the meantime if you want to discuss any aspect of your insurance you will find the direct dial numbers for all COSIS staff on the “Contacts” section of our website.
Overview and impact on COSIS servicing arrangements (Original article)
As I’m sure you are aware we are currently in the midst of a challenge from COVID 19 that is unprecedented in living memory. Whilst the insurance industry, like many others, had detailed business continuity plans no one imagined a shutdown on this scale with the need to move much of the industry to remote working at short notice. To add to the insurance industry’s difficulties it finds itself protecting a vast range of property no longer occupied or used as described when Insurers accepted the risk and calculated a premium. This will be an important consideration when trying to understand and interpret insurer's communications during this crises.
Insurers have had to consider how they might reasonably deal with the changes forced upon their clients by the governments response to COVID 19 but prior to the announcement of the “lockdown” the pace of change had been such that advice written one day had become obsolete by the next. Hopefully however we will now have a short window of stability that will allow this advice to remain valid over the next few weeks.
This web-page is primarily intended to provide guidance on managing and protecting church property from an insurance stand point. The Church of Scotland has however issued general advice regarding COVID 19 as well as specific information regarding the management of your property which can be found at the links below.
Managing the change in your Property Risk
The most common question COSIS staff are being asked is what the requirements are for managing church property closed directly following recent government advice to avoid public gatherings and subsequent lockdown. Aviva have now agreed to extend the period before an active church, closed following the lockdown, is deemed unoccupied from 45 to 90 days. This is very helpful as, for a significant period, it avoids additional premiums relating to unoccupancy and the associated formal requirement for inspection. It is important to note however that congregations still have a Duty of Care under their insurance policy to
- maintain their Buildings, Contents and Equipment in a satisfactory state of repair
- take all reasonable steps to prevent damage to the Property Insured
- take all reasonable steps to prevent accident or injury to any person
- comply with all legal requirements and safety regulations and conduct their business in a lawful manner.
It is impossible to be prescriptive about what must be done to meet this duty of care as each church has its own individual circumstances. Aviva have suggested that congregations should carryout risk assessments to consider the changing risk/lack of supervision. As a minimum however inspection both internally and extenally on a regular basis and both before and after an increased risk, such as extreme weather, would seem like an appropriate base level.
An Important Notice regarding your policy can be viewed here that summarises the areas that Aviva think you should be considering for action.
Property where there are existing Inspection or Management requirements
Please note that the text above only applies only to property which has closed as a direct response to the Government’s request to avoid public gatherings. Where a property was already subject to an agreed inspection or other risk management requirement this will remain in place without specific referral and agreement to the contrary. In general the requirement that these properties are inspected both externally and internally is unlikely to be waived.
Loss of Income from Letting Churches and Halls
In addition to concern over risk to the building many congregations will be wondering about the position regarding loss of earnings from letting their hall. Unfortunately there is no cover under our church policy or the vast majority of commercial insurance policies. The only cover for loss of revenue due to disease relates to named diseases specified in the policy wording where the risk can, to a degree be statistically quantified, and an appropriate premium charged.
Aviva’s statement on this issue is shown below
Does Aviva's Business Interruption cover COVID-19?
The Government announcement on Tuesday evening (17 March) concerning both ours and other insurers' position with regards to Business Interruption has caused some confusion and as a result, we've received a number of queries from both you and your clients.
To clarify, COVID-19 is not covered under our standard Business Interruption policies and, as the chancellor said, you cannot retrospectively change insurance contracts at this time without threatening the future of the insurance industry.
Our Business Interruption cover is based on a specified list of diseases and has been since the SARS outbreak in 2003. These policies exclude Business Interruption due to new and emerging diseases, like COVID-19.
Our policy wording clearly identifies the diseases we offer cover for and, in addition, highlights that new and emerging diseases like COVID-19 are not covered.
For information both you and your clients may find useful, please see details of the additional support the Government is provided on