Property and business income
What is ordinance and law coverage and why do older buildings need it? Coverage for the extra cost of rebuilding to current building codes after a covered loss, rather than only replacing what existed before.
Standard property coverage is built around a simple idea: put back what was there. Building codes are built around a different idea: whatever gets rebuilt must meet today's requirements. Ordinance and law coverage exists to close the gap between those two, and on an older building the gap can run into hundreds of thousands of dollars.
It is usually written in three parts. One covers the value of the undamaged portion of a building that a code official orders demolished. Another covers demolition and debris removal costs the code triggers. The third covers the increased cost of construction to bring the rebuild up to current standards, which is the piece that funds modern electrical, sprinklers, energy requirements, and accessibility upgrades that did not exist when the building went up.
The uncomfortable part is that this coverage often costs relatively little and is frequently left off anyway, because nobody asks the question until an adjuster and a code official are standing in the same room. If you own or lease anything built before the current code cycle, this is worth confirming in writing.
Heard on the show. Jessica works through this one in Covered Or Denied: The Hottest Gameshow in Insurance!, with the full story and the transcript.
A reduction in your claim payment that applies when you insured a building for less than the percentage of its replaceme…
Coverage that replaces lost income and continuing expenses while your business recovers from direct physical damage caus…
An extension that pays lost business income when a government order blocks access to your premises because of damage at …
This page is education, not advice. Policy language varies by carrier, form, and state, so confirm how your own program is written with a licensed insurance professional.
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