Notre-Dame Fire Damage Case Study

Background

Notre-Dame Cathedral in Paris was completed in 1345 after nearly 200 years of construction. It is celebrated as one of the finest examples of French Gothic architecture and is recognized as a symbol of Paris and the nation of France. The Notre-Dame cathedral attracts over 12 million visitors annually and is home to the Archdiocese of Paris.

On April 15, 2019, a massive fire erupted in the attic, which caused the wood-framed roof and spire to collapse. Around 500 firefighters responded to fight the blaze. Based on the photographs, interior smoke damage is present in many places. According to reports, much of the artwork within the structure was removed and placed in storage during the fire, but some relics and art pieces may have sustained damage. 

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Coverage Issues

At the time of the fire, multiple contractors were working on the cathedral. If a contractor is found liable for the blaze, the amount of liability coverage carried would be insufficient to cover the cost to repair the fire damage to the cathedral or to repair or replace lost artwork. 

The French government self-insures several national landmarks, including the Notre-Dame Cathedral. As such, the government will have to figure out a way to pay for repairs. Many benefactors have come forward to pledge money to support repairs, however, at this time these are only promises. Until the funds are deposited into government coffers, it is reasonable to assume that repairs will be funded by the French people. 

Many works of art held at Notre-Dame are “priceless,” therefore they are not insured. If any of these pieces sustained damage, the state would also bear the cost of repairing or restoring them, assuming that the art is not fully lost. 

Risks of Underinsuring

The lack of insurance coverage at the Notre-Dame Cathedral has highlighted the risks presented by underinsuring a property.

Typically, if there is a covered fire at a property, the primary insurer will pay the loss. If it is found that there is a party at fault, the insurer will subrogate against that party (or their insurer) to reclaim any losses paid. 

In the case of Notre-Dame, we have contractors who are working on the cathedral without adequate coverage. Therefore, if one of them is found to be responsible for causing the fire, that contractor’s policy limits would be insufficient to cover the damages that they caused. When that happens, the primary insurer would cover the gap. In this case, there is not a primary insurer because the state self-insures the property and therefore assumes all liability.

This is similar to having an unlicensed or under-insured contractor working at your home or business. Accidents happen. If that contractor causes a fire or some other damage to your property, and they don’t have adequate insurance, you could be left financially responsible for their damages.

If you have insurance, your policy will likely cover the cost to repair damages to a building. However, personal property losses are often adjusted to the market value of the property at the time of the incident. This means that depreciation will be taken on the item based upon the age and condition, and in many policies the depreciation is non-recoverable. This means that sentimental items or keep-sakes will be lost because the market value of items such as these is generally very low. 

The Claims Process

For the next several months, engineers, fire investigators, insurers, and government officials will be looking into the origin and cause of the blaze to determine where to point the blame. Given that their findings will invariably involve a consequential sum of money, a long court battle will likely resolve the question of liability.

While the origin and cause is being determined, engineers, architects, and estimators will be assessing the damage to determine the full scope and cost of repairs. Initial inspections have found that the cathedral is structurally sound, but it is possible that there is latent damage to the 800-year old limestone and mortar, and this will be evaluated as more time passes. According to Robert Read, the leader of Hiscox’s head of art and private client, the restoration process could take up to 20 years. He further explained that some of the skills required to rebuild would likely need to be re-learned and the total repair costs could reach $8 billion.

Right now, an inventory of all the affected artwork is being compiled. If art was damaged, experts will be retained to determine the feasibility of repair or restoration and the associated costs. If the art piece was priceless, then it would not be insured. If the art was on loan, then there would be some coverage.

Recommendations

Don’t buy cheap property insurance coverage and don’t be frugal with endorsements.

For example, many people skip out on the water backup endorsement because it will save them around $50 per year. Guess what, if you have a sewer backup, the loss could easily run into the tens of thousands of dollars and pose a health risk to you and those who live or work at the property because of the harmful bacteria in sewer water.

Low-cost insurers often try to nickel-and-dime policyholders. This is especially important if you have high-grade property. A budget insurer may try to replace your high-grade property with standard-grade. 

If you can, don’t self-insure. In the event of catastrophic damage, you will be happy you didn’t.

Don’t let uninsured contractors work on your home or business. It’s a bad business practice to operate a business without insurance.

Keep a running inventory of your personal property. If you have valuables, the best practice is to keep an up-to-date appraisal of those items so that if a loss occurs, you will have a record of value. You can also keep receipts to use as proof of payment.

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