Home Inspection

One of the most important but often-overlooked coverages available to extend the protection afforded under a Property policy is Ordinance or Law Insurance. Most people assume that by having a replacement value property insurance policy means that if something happens, they're in good shape. After all, replacement value should pay for a brand new version of whatever was lost or damaged, right? But when it comes to dwellings, both new and old, this isn't always the case.

Ordinance or Law Insurance coverage is comprised of three separate coverage sections:

    Coverage A: Loss To The Undamaged Portion Of The Building

    This coverage indemnifies a property owner for the undamaged portion of the building — even though there was no direct damage to it. The key is to provide a Coverage A limit that equals 100% of the replacement cost value, to the extent possible. This coverage is generally subject to the coinsurance clause, if it exists in the Property policy.

    Coverage B: Demolition Costs

    Demolition Cost coverage will address the cost to demolish and/or clear a portion of a damaged or undamaged building, where required by law and when triggering other areas of this coverage section. The amount for Coverage B is generally specified via policy endorsement, and should be set to properly reflect anticipated needs.

    Coverage C: Increased Cost Of Construction

    When increased costs are incurred as a result of the enforcement of an ordinance or law after a covered Property loss, this coverage will generally pay for required code upgrades, i.e. repairs or additions that are required via ordinance or law, but were not present in the structure pre-loss.

In order to have coverage for the above items, the homeowner needs to have purchased Ordinance or Law Coverage for an amount sufficient to pay for the increased cost to bring the damaged (and any undamaged) portion of the building up to code, including the foundations.

Contact Park & Associates today to learn more about this coverage.

Posted 11:00 AM

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