Although the old adage says “April showers may bring May flowers,” insurance folks know something else is blooming in the atmosphere: summer weather. Whether your particular geographical threat is hurricanes, tornadoes, forest fires, mudslides or earthquakes, the arrival of summer heralds the advent of increased weather risk. And thus, as the Zombies sang, it is also the “Time of the Season” for Ordinance or Law Coverage (OLC).

If E&O claims and media accounts are any indication, two gaps lurk to ensnare the unsuspecting insurance practitioner.

First, the coverage itself. We'll stick to the commercial side of the ledger, specifically, the ISO CP 04 05 10 12. This form provides the classic three tiers of OLC:

• Coverage A: Coverage for Loss to the Undamaged Portion of the Building

• Coverage B: Demolition Cost Coverage

• Coverage C: Increased Cost of Construction.

While Coverage A addresses the OLC exclusion for direct loss to the building, often overlooked is the need for additional limits for Coverages B and C. Depending upon your community regulations pertaining to the level of damage that separates constructive total loss from minor damage, the limits that fund Coverage B can be significant. Those same regulations drive the need for changes or upgrades required to bring the new building into full compliance. The amount needed for Coverage C can range from minor to even tripling the original building limits.