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Ordinance or Law: Do You Need It?

Ordinance or Law: Do You Need It?

For buildings of a certain age “grandfathering” is the way to avoid making costly changes to meet certain ordinances or laws such as the Americans with Disabilities Act (ADA). Older buildings are exempt from following these laws since they were constructed prior to the law. However, if the building sustains enough damage during a loss to require repair or rebuilding of a certain amount, then grandfathering no longer applies. The building must then be brought up to current code, resulting in large out-of-pocket expenses. What Can You Do About It? Lenders may require something called Ordinance or Law Coverage, or it may be a coverage recommended by your insurance broker. Because the premium for this coverage isn’t necessarily cheap, you may have passed on it. But what is it? Ordinance or law coverage is a great way to include additional funds for buildings that need to be brought up to code after a property loss. What Does It Cover? This coverage has three separate limits: Coverage A – Coverage For Loss to the Undamaged Portion of the Building. This provides for coverage to the undamaged part of the building that the law may require the owner to demolish in the event of a loss. Coverage B – Demolition Cost Coverage. This provides additional coverage to reimburse for the costs of demolition for the undamaged portion of the building. Coverage C – Increased Cost of Construction. This provides additional coverage to reimburse for increased costs to repair or replace the existing structure and bring all systems up to code including wiring, plumbing, ADA, etc. Coverage A should typically be for...