What is ordinance or law insurance?
Also known as building ordinance or law coverage, this coverage helps pay for construction and repair costs if your building is damaged and needs to be brought up to code during repairs.
If you own commercial property, you know how important it is to have property insurance. You might assume that your insurance would cover you completely if your building suffers damage or destruction, but that’s not necessarily true.
There are several scenarios in which your commercial property insurance may not help you cover costs. These include bringing your building up to code after an accident or complying with local laws about rebuilding damaged properties. For that, you need to add ordinance or law insurance to your property insurance.
Ordinance or law insurance, also known as building ordinance or law coverage, helps pay for construction and repair costs if your building is damaged and needs to be brought up to code during repairs. Adding ordinance or law insurance to your property insurance coverage is a good idea for any property owner. But it is particularly vital for owners of older buildings that may need more significant work.
Ordinance or law insurance is typically added as an endorsement to your commercial property insurance, although your insurance plan may already include it. Make sure to check your policy to see whether or not it contains the necessary provisions. Even if the policy includes some ordinance and law coverage, you might want to increase the amount of coverage to meet your needs.
There are several scenarios in which you’ll be happy you have ordinance or law coverage, including:
With an ordinance or law insurance policy, you can get compensation from your plan to help make code-compliant repairs. Or you can get covered for the costs involved in tearing down the undamaged sections.
Commercial property insurance offers broad protection against accidental physical loss or damage to covered property, including the building, its contents, and the building’s exterior, as well as business interruption because of physical loss.
Ordinance or law insurance serves as a complement to property insurance by providing financial assistance in scenarios that are consequential to property loss.
Since ordinance or law insurance is additional coverage, it’s not a replacement for basic property insurance. For example, an ordinance or law insurance policy wouldn’t pay for repairs to your code-compliant building as a result of a fire.
Ordinance or law insurance includes three kinds of coverage:
How are they different? Let’s say 80 percent of your building is damaged and the entire structure has to come down. Your property insurance will only cover 80 percent of the cost to tear down the building:
Bear in mind that you can set the maximum amount of coverage you want for these coverages. A lower coverage amount translates into a lower monthly premium but limits how much you’ll receive if you need to make a claim.
Owning property can be expensive, but so can repairing or rebuilding in the event of an accident or disaster. If you include ordinance and law insurance into your commercial property insurance coverage, you can take the bite out of expenses you’d otherwise be on the hook to pay.
If you own a building—especially an older one—you might want ordinance or law insurance so you can:
With the right policy and endorsements, you can breathe a sigh of relief knowing you’re protected even if your building suffers catastrophic damage.
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