Insurance can sometimes be complicated and hard to understand. In our “Diving Deep” series we will explore sometimes forgotten or misunderstood coverages to help you better understand their application. This series will focus on one of the most important property coverages for South Florida insurance buyers – Building Ordinance & Law Coverage.
Building Ordinance and Law Coverage is an option for property insurance. A standard property insurance policy replaces the damaged property with the same or similar property. If a structure was built a long time ago, building a similar structure as a replacement may not satisfy new local regulations. Building a new structure that meets modern environmental standards, and standards for protection against disasters such as hurricanes, will cost additional money, which Building Ordinance or Law Coverage provides.
The South Florida Building Code stipulates that if a building is damaged 50% or greater the entire structure will have to be torn down and rebuilt according to current building codes. If a roof is damaged 25% or greater the remaining 75% will have to be torn down. The new building must be rebuilt to current codes.
Now that you better understand this at a high level, lets dive into the first of three coverage parts that make up this coverage. Coverage A will cover the cost to rebuild the undamaged portions of the building to new standards. Say, for example, a fire destroys ¾ of your building. While you would have to rebuild the damaged portion, you will also need to rebuild the undamaged portion of the building to be compliant with current codes. This is where Coverage A kicks in. It would pay the cost to rebuild the remaining ¼ of the building that now needs to be brought up to current code.
In a marketplace with a lot of older buildings and hurricanes perpetually changing our building codes, this coverage could not be more important for South Floridians to consider. Whether you’re an association, a homeowner, or a commercial property owner this is something you should be talking to your insurance consultant about. And if you’re not… give us a call and let us help you better understand how this coverage relates to your insurance needs!
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Written by Robbie Korth
If you have any questions, please feel free to contact Robbie Korth at firstname.lastname@example.org