Last week, I went into detail about the speicific parts of Ordinance or Law coverage. Click here to read the article.

When considering the need for the Ordinance or Law coverage, building owners should also consider the effect that the new codes or laws will have on the time it will take to repair or replace the building.
 
Under a normal replacement cost policy, (without Ordinance or Law coverage) that includes coverage for loss or income, extra expense and/or loss of rents will not include coverage for the additional time it takes to repair the building or rebuild it to current codes.  So the loss of income, extra expense and/or loss of rents will not be paid for this extra time.
 
For example, a building burns and could normally be repaired in six months. However, because of the new codes, the undamaged portion of the building has to be destroyed and the new structure has to have a sprinkler system installed as well as a new roof design. Because of these changes, it will instead take ten months to repair the building.  In this example, the loss of income, extra expense, and/or loss of rents would not be covered for the entire ten months but would stop after six months.
 
So, it is also important to consider purchasing an endorsement that includes loss of income, extra expense and/or loss of rents for the extra period it takes to repair or rebuild the damaged building.  Normally this endorsement will be called something similar to "Ordinance or Law - Increased Period of Restoration".

If you have any questions, or would like more information about Ordinance or Law coverage, give us a call at 800-648-0856.

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.