Tuesday, May 11, 2010

Building Ordinance Coverage

This endorsement provides coverage if the enforcement of any building, zoning or land use law results in added cost that are not covered as a direct loss.

The endorsement is separated into three distinct parts: section A, B and C, which typically allows the policyholder to purchase one or all of these valuable coverages.

SECTION A applies to loss to the undamaged portion of the building. This endorsement covers the loss of value of the undamaged portion of a building caused by enforcement of ordinance or laws.

If a government agency requires the demolition of your entire building because the damage exceeds a certain percentage as detailed in their ordinances, this coverage would apply.

Without this endorsement, you would have no coverage for the part of the building that was not damaged because that part of the building had not suffered “direct damage.”

SECTION B of this endorsement covers the cost of demolition of the undamaged portion of the building. Without this coverage, you could be on the hook for tens of thousands of dollars in demolition and disposal costs.

SECTION C provides payment for the increased cost of construction if the code enforcement requires improvements to construction that were not in the original building. This coverage will pay these increased costs whether constructions is at the same location or another location, with some restrictions.

The building ordinance endorsement requires that you purchase coverage equal to 80 percent of the property’s replacement cost value. This is an optional coverage. For more detail please call your friendly Fey Insurance Services representative.