But Only Part Of The Building Was Damaged!!!!!

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How does a $20,000 property claim cost $100,000 to repair?

Zoning Laws continually change and can vary greatly from town to town.  Did you know that in some areas, if 25% of the building is damaged by a fire, the ENTIRE building must be brought up to code?   New codes can require the installation of hardwire smoke detectors, and sprinklers.  Not to mention updated electrical wiring, plumbing, wider doors or hall ways, handicap ramps, emergency lighting, etc.

But you have property insurance right?  Property Insurance has a simple purpose: to make you whole.  The insurance company can provide funds for a covered loss to build the structure back to what it was prior to the loss.  If the building had four walls and a roof, the insurance company will pay for four walls and a roof.  But the coverage is limited to rebuild what you had.   Imagine the town told you had to bring the WHOLE building up to code, even the units/areas/floors that were not affected by the loss.

Where does the money come from to bring the building up to new the codes?   You would need to look to the Law & Ordinance Coverage within the property section of the policy.   One of the components of Law & Ordinance coverage is “Increased Cost of Construction”.   Consult with your insurance broker about your policy’s current limit, and then inquire what the cost would be to increase.  You will ask yourself or your broker “what is the right limit”.  This is an excellent question and not one easily answerable by someone that is not a contractor.  Even contractors have a difficult time as the codes, rules, and regulations vary by town and are constantly being updated.   One thing is sure, if the current policy only provides a built in limit of $10,000 or $25,000 then you should look into increasing the limit.


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