Imagine that a sudden fire swept through the building that once housed your business, destroying over half of the property and its contents. After such a massive catastrophe, you learn that local ordinances require you to demolish the remnants of the building. The building inspector also informs you that the building can not be reconstructed exactly as it existed before the fire because that would violate current building and zoning codes. At this point, you’re faced with a gigantic sum needed to get your building back and your business up and running again. Do you know if your insurance will help cover the costs?

Generally, basic commercial property policies exclude coverage for building updates, repairs, or demolitions mandated by public law or ordinance. This can be a very expensive gap in your coverage even if you are ordered to add a sprinkler system or to make other minor changes to meet current codes. The cost of meeting public access requirements by the Americans with Disabilities Act (ADA) is also generally excluded under basic commercial property contracts.

To fill this vital gap, you may want to consider adding an ordinance or law endorsement to your business owners policy. In the event that your building is damaged by an insured peril, an ordinance or law endorsement can provide coverage for the increased cost of construction necessary to comply with current building codes, the cost of demolishing the undamaged portion of the building, and the cost of rebuilding the undamaged portion that was demolished.

Your building may have met all existing laws and ordinances when it was constructed, but codes change over time. As a building owner, an ordinance or law endorsement could prove to be a valuable addition to your insurance protection. Even if you rent your building, you may have a need for such an endorsement. Contact one of our qualified insurance professionals for more information.