After a fire, you will likely want to restore your commercial property to its pre-loss condition as quickly as possible. However, your insurer may not pay to restore the structure back to the way it was if the building was not in compliance with state and federal building codes. The costs of these upgrades can be so substantial that it may be cheaper to demolish the building and start from scratch, leaving owners out of pocket for restoration. Attorney Bill Voss explains the value of ordinance and law coverage and the kinds of upgrades this insurance will pay for.
Ordinance Coverage May Pay for Fire Damage Upgrades
Ordinance and law coverage, also called code upgrade coverage, provides payment for any necessary improvements or code requirements that have been made mandatory since the structure was built. Code changes may affect the electrical wiring, plumbing, door and window placement, foundation, and many other portions of the structure.
Depending on the extent of your commercial ordinance coverage, upgrades may include:
- Increased cost of construction. The older a building is, the more likely it is to need upgrades to its structure. Some building laws may even require the new structure to have a completely different floor area or layout to be compliant with codes, such as a three-story building that must be rebuilt as a four-story building.
- Installing newly-required items. Code coverage may also be used to install items that are required by law that were not present in the original structure, such as fire-suppression systems. In many cases, the cost of newly-required items is fully covered by ordinance and law insurance.
- Undamaged property in violation. Coverage usually limits upgrades to the damaged portion of the property. If electrical wiring is outdated in one wall, there is a good chance it is outdated throughout the structure—but ordinance coverage may only pay to replace the wiring in the fire-damaged rooms. However, in exchange for a slightly higher premium, owners may extend ordinance coverage to include undamaged portions of the same building.
- Green building upgrades. Using sustainable materials or “green building” methods may be included in the coverage or purchased as an endorsement to a commercial policy. This can include installing energy-efficient appliances or replacing insulation with renewable materials.
If you are having trouble getting an insurer to pay for a fire at your business, we can examine your policy and get you the full amount you are owed. Simply fill out the form on this page today to contact the Voss Law Firm or order a free copy of our book, Commercial Property Owners Must Read This BEFORE Filing an Insurance Claim.