The endorsement does not require that the structure be rebuilt at the same location. The endorsement deletes the coinsurance clause of the policy. It also provides that, in the event of a total loss, the insured may receive the smallest of the limit of insurance or the cost to replace the damaged building on the same site (or on a different site if relocation is required by ordinance or law) with a less costly building that is functionally equivalent to it.

After the loss, the cost to reconstruct the building at the current location would be established. The insured would be paid the lesser of the $500,000 limit or the cost of rebuilding at the same site. In other words, it may cost $425,000 to reconstruct the building at its current location. Identical reconstruction at a different location might be $475,000 because of bedrock or foundation requirements. The insured would be provided the lesser of these, or $425,000. However, if an ordinance or law required that a new site be used, the insured might qualify for the $475,000 settlement.

You may also wish to be sure that the underwriter agrees that rebuilding the structure without the apartments is functionally equivalent to the insured structure.