Standard property insurance provides coverage for returning a building to the condition it was in prior to a covered loss. What is not covered is the increased cost due to the enforcement of ordinances or laws regulating construction and repair of damaged buildings. Ordinance or law coverage was developed to fill this gap.
Ordinance or Law Specialized Coverages
- Coverage for the undamaged building. This is triggered when only a portion of a building is damaged, but the undamaged portion is deemed unusable by an ordinance or law requiring that it be completely torn down. The result is a total loss. Even though there was not direct damage to the entire building, ordinance or law protection covers the undamaged portion as well.
- Coverage for demolition. This pays the cost to demolish the undamaged portion of a partially-damaged building.
- Coverage for increased cost to repair. This includes recovery of costs to make the building compliant with current building codes.
What about tenant’s improvements and betterments? Consider this example:
A business owner/tenant builds out a cafe which includes a single layer of 1/2″ drywall. This is protected as tenant’s improvements and betterments under business personal property. Ten years later, a vehicle crashed through the front wall. New fire protection codes require an additional 1/2″ layer of drywall. Society Insurance ordinance or law coverage extends to tenant’s improvements and betterments, which would cover the cost of the necessary additional drywall.
Ordinance or law coverage is automatically included in Society’s standard business owners policy with a blanket limit of $50,000 with the option for increased limits for demolition and increased cost of construction available.
To learn more about this important coverage and other small details that make a big difference, contact your local Society agent.
