In reviewing a multi-unit property owner’s insurance needs for a condo, apartment building, co-op, brownstone, or mixed-used structure, there are many exposures to address and ensure that coverage will respond. Having replacement cost coverage with Commercial Property insurance is one important feature of a sound program but making sure that the policy will also address many of the costs involved in rebuilding after a loss is equally important.
This is especially true for older properties. Buildings are constructed to meet or exceed building codes in effect at the time of their construction. As they age, buildings fall out of compliance with today’s regulatory codes. For example, let’s say a condo’s roof needs to be replaced after a loss, but the old roof does not meet the current municipality’s energy code. The insurance will pay for the cost of replacing the old roof, but not for the increased cost for upgraded insulation or other expensive measures that may be needed to meet the current code without Ordinance or Law insurance in effect.
Ordinance or Law insurance for city homes is designed to step in to cover costs that an owner may incur as a result of a property loss such as a fire or natural disaster. There are three types of coverages under Ordinance or Law insurance:
- Coverage A will treat a property claim as a total loss (up to the policy limit) if the law requires that a partially damaged building must be completely demolished.
- Coverage B pays for the increased demolition costs incurred to remove the undamaged portion of the building.
- Coverage C pays for upgrades required by law to the building, such as a new sprinkler system, upgraded electrical or HVAC systems, and plumbing units.
Additional Information on Ordinance or Law Insurance You can find more detailed information here on what each of these Ordinance or Law coverages offers, as well as typical claims scenarios to share with your multi-family property insureds. Ordinance or Law is often not automatically included in a standard Commercial Property policy. Distinguished’s City Homes program includes Ordinance or Law Coverage A, B, and C with our Property insurance.