Building Ordinance Coverage

January 14, 2015

Why You Need Building Ordinance Coverage?

State and local governments enact and enforce building codes or ordinances to protect the health and safety of building occupants.  A building ordinance establishes a minimum standard that must be met to maintain compliant with the building codes that are set forth.  Building ordinance coverage is needed to cover the additional costs that could occur due to these codes when your property has been damaged due to a covered loss.

Building codes can vary from place to place.  For instance, in states prone to earthquakes, building codes may require concrete structures to be reinforced with steel.  Likewise, building codes applicable in flood-prone areas may require buildings to be elevated above ground level.

Building codes mainly affect new structures.  However, they may also apply to existing structures, including those that have been damaged, which are being renovated, altered, reconstructed or used in a different way.  Some codes may require a damaged building to be reconstructed rather than repaired if the damage amounts to say, 50% or more of the building’s value.  Codes can affect the size, design, height, usage and location of a structure as well as the building materials used.

Building codes change frequently.  The codes that existed when a structure was built may be outdated when a loss occurs.  To meet current codes a damaged building undergoing repair may require expensive materials.  Some structures may need to be reconfigured.  Thus, building codes can significantly increase the cost of the repairs or renovations.

Most property policies provide little or no coverage for loss or damage caused by the enforcement of building ordinances.  Many policies contain exclusions under Ordinance or Law.  It precludes any loss caused by the enforcement of any law or ordinance that regulates the construction, use or repair of any property.  It also excludes any law that requires the tearing down of any property, including the cost of removing its debris.  The Armstrong insurance program includes under Building Ordinance coverage with increased cost of construction to meet new building codes. Coverage includes an additional $2,500,000.00 in building ordinance “upgrades” for buildings built prior to 1975 and $5,000,000.00 for buildings built post 1975.

The Ordinance or Law exclusion may apply even if a building has not been damaged.  For instance, Clarence owns a barber shop located in the town of Merryville.  The Merryville Building Department has determined that the shop is old and in danger of collapse.  A local ordinance requires Clarence to demolish the shop.  Because of the Ordinance or Law exclusion in Clarence’s property policy, his insurer will not pay the cost of demolishing the building or removing its debris.

Ordinance or Law coverage is available by an endorsement.  It covers losses caused by building code enforcement if the building has suffered damage by a cause of loss, such as a fire, that is covered by the policy.  Let our experienced licensed representatives help you find the right coverages you need by evaluating your particular risks.  Contact the Armstrong Company Insurance Consultants today at 866-990-9286.  We are here to work for you!

The Armstrong Company Insurance Consultants  (License #0440075)