If your clients own commercial buildings you, as a broker, should have a pretty good idea of the most critical coverage they need. One often overlooked piece of this ever-changing puzzle that is insurance, is Building Ordinance or Law coverage. Codes and new laws are always taking effect and Hurricane Katrina showed us what happens when you don’t have Ordinance or Law, you don’t get to rebuild because you can’t afford it.
The Three Parts
There are three coverage parts to the Ordinance or Law endorsement. Yes, it must be added by endorsement and some parts you may need to select or increase a limit.
Part A – Loss of Undamaged Portion – If just some of the building is damaged, due to a covered peril, but there is an ordinance or law requiring for the whole building to be torn down, this part will kick in.
Part B – Demolition – This goes along with part A and will pay for the costs to demolish that undamaged part of the building.
Part C – Increased Cost of Construction – If the damaged portions of the building must be repaired or replaced and it ends up costing more due to codes and laws, this part will pay for that.
Make sure to explain any exclusions to your client, as well as reminding them that this coverage will only apply if the damage is caused by a covered peril. If there ends up being two different perils and one is excluded, that part won’t be covered. Be honest and upfront with your insured to avoid issues at claim time.
Contact Novita Insurance today to get a quote for all of your commercial building insurance needs. Our ComStar product is ahead of the game, and of course we have this vital coverage included and can increase the sub-limits if needed.