building ordinance coverage
Coverage for loss caused by enforcement of ordinances or laws
regulating construction and repair of damaged buildings. Older structures
that are damaged may need upgraded electrical; heating, ventilating,
and air-conditioning (HVAC); roofing materials; fences; and plumbing units based on city codes.
Many communities have a building ordinance(s) requiring that
a building that has been damaged to a specified extent (typically
50 percent) must be demolished and rebuilt in accordance with current
building codes rather than simply repaired. Unendorsed, standard
commercial property insurance forms do not cover the loss of the
undamaged portion of the building, the cost of demolishing that
undamaged portion of the building, or the increased cost of rebuilding
the entire structure in accordance with current building codes.
However, coverage for these loss exposures is widely available by
endorsement. Standard homeowners policies include a provision granting
a limited amount (e.g., 10 percent of the dwelling limit) of building ordinance coverage; this amount can
be increased by endorsement. See also
Ordinance or law coverage.
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