Ordinance or Law Coverage
on a Commercial Policy

Q

We insure a church on a commercial property policy (CP 00 10 04 02). Endorsed to that policy is “Ordinance or Law Coverage” ( CP 04 05 04 02). The church purchased all three optional coverages on that endorsement: A—Coverage For Loss to the Undamaged Portion of the Building; B—Demolition Cost Coverage; and C—Increased Cost of Construction Coverage.

Recently the church suffered a fire loss. The building had several exposed wooden beams. These beams were charred.

The insurer—s engineer says that the beams can be sandblasted, repainted, and resealed. However, the local building code says that, because they suffered charring of more than 1/8 of an inch, they must be replaced.

The insured has submitted a claim for the cost of new beams under Coverage C of form CP 04 05. The insurer has denied, stating that their engineer—s report precludes replacing the beams. We would like your opinion.

Indiana Subscriber

A

Although the insurer's engineer believes the beams can be sandblasted, repainted, and resealed, that is not the point in this instance. The local building code takes precedence. The cost to replace the beams is properly covered by coverage C of endorsement CP 04 05.

The insured has incurred increased costs of construction because of the enforcement of a building code, and these costs are covered under coverage C of form CP 04 05.

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