What does Building Ordinance Coverage mean? Read on to discover the definition & meaning of the term Building Ordinance Coverage - to help you better understand the language used in insurance policies.
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.
We hope the you have a better understanding of the meaning of Building Ordinance Coverage.