Do you own a home or commercial building that is more than 10 years old? If so, you may be at risk if your building is damaged and has to be repaired.

Say your building is damaged and you have insurance, you think you are all set to go, pay your deductible and get started on the repairs, right?  Unfortunately, it is not that simple. Before the repairs can begin, you or the contractor must receive approval from at least one government entity, and that entity will likely tell you that your building now has to be brought up to code (building codes are constantly changing, and can require all kinds of changes like parking space numbers and set back requirements).

Will your insurance cover the increased costs? Maybe. There is coverage available and the insurance industry has labeled the coverage as "Ordinance and Law Coverage".  Some insurance companies may have a small amount of this coverage built into their policies, but many do not and often the "built-in" coverage is not adequate.

Ordinance and Law Coverage has three basic parts:

    1. Demolition Coverage

    2. Loss of Value

    3. Increased Cost of Construction

In my next entry, I'll explain the three coverages mentioned above in greater detail. If you have any questions, don't hesitate to email me at davidd@lymansheets.com.

Dave Drayton has been with Lyman & Sheets since 1981, and has more than 27 years of risk management, insurance operations and sales experience. Email Dave at davidd@lymansheets.com or connect with him on LinkedIn.