I have an insurance carrier that does not want to pay for the cost of an engineering report due to vehicle damage of a dwelling on a Dwelling Fire Special Form FL-3. There is an exclusion that reads:

Ordinance or Law-We do not pay for loss or increased costs which results from the enforcement of a code, ordinance, or law which regulates the use, construction, repair, demolition of property, or removal of its debris.

The contractor contends that he needed to pull a permit due to the structural damage to the foundation, wood framing, and brick veneer. The engineer came out and wrote a protocol as to what exactly was damaged. He further stated that the city inspector wanted the engineering report in order to pull as well as close out his permit. It appears that most insurance companies allow for a permit fee. Wouldn't the permit cost be ordinance or law as well? It is possible we should have hired the engineer as a consultant in order to write the protocol instead of putting it through the contractor and having it excluded as ordinance or law.

Please provide your thoughts on the cost of the engineering report and whether or not it is part of ordinance or law.

Kentucky Subscriber

The engineering report is not an increased cost due to an ordinance; it is a tool to determine the amount of damage. As long as the property was damaged, and repairs are not being required due to an ordinance and not the loss itself, the engineering report is part of the loss, not part of ordinance or law.

The ordinance or law section provides that increased costs purely because of an ordinance or law requires changes to the property, those losses are not covered. For example, part of the house burns. In conducting the inspection, the county inspector discovers that the wiring for the entire dwelling is old and not up to code, and requires the entire house to be rewired. This is ordinance or law, and this is what is excluded, the costs to rewire the entire house.