Ordinance or Law Coverage: Code for Recovery!

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When and How the Exclusion Applies

The question naturally arises at this point: How can we determine whether the exclusion will apply in any given case and what will be its probable effect on a loss adjustment?

Agents, brokers, risk managers and consultants are well advised to become familiar with local and state building and zoning laws and with the construction and occupancy details of any property with which they are involved. The problem is that it is not always easy to determine the precise, applicable codes or laws.

Consultation with the city or county building department will often be the most helpful in this regard. These officials may even be aware of federal laws that might come into play or be able to offer the names of persons who are knowledgeable in this area.

Some basic questions should be raised:

As an alternative, it might be advisable for agents, brokers and consultants to recommend that clients seek the assistance of competent attorneys involved in real estate law.

Worst Case Scenario

Given answers to these questions it is then possible to construct a “worst case scenario” involving the effects of these laws in the event of possible loss to the property. Based on this scenario, appropriate insurance can then be arranged, nullifying the Ordinance or Law Exclusion and replacing it with one or more of the three coverage extensions available to provide adequate protection.


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