Q
We are insuring the owner of a new multistory construction project. Would we have a potential coverage problem if there was a fire loss, or other covered peril loss, that so damaged the integrity of the structure that the city building department came in and required the demolition of the whole structure? I am referring to the exclusion regarding the enforcement of any building ordinance or law requiring the tearing down of any property, including the cost of removing its debris.
Do we have a need for ordinance or law coverage for this exposure?
Ohio Subscriber
A
The commercial property policy—unadorned by the ordinance or law endorsement—would respond to the loss. The answer is essentially that this is no different than settling any fire loss where damage is so great as to cause a total loss.
Ordinance or law coverage responds to the additional expense that a building owner encounters after a loss due to laws or municipal building codes enacted after the building of the structure, but which the owner must now comply with in rebuilding his building. In your scenario, it is not the enforcement of law or code that adds to the loss, but the fact that the building was so damaged as to be construed a total loss. As in any total fire loss, the cost of clearing and rebuilding is covered, subject to applicable policy provisions and limits.
We see no need for ordinance or law coverage to protect against the exposure outlined.
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