ADJUSTERSINTERNATIONAL.COM 7 Ordinance or Law Coverage: What’s covered, what’s excluded, and where? Most property insurance coverage in the U.S. is written on policy forms provided by or modeled after those developed by the Insurance Services Office (ISO), the largest advisory organization serving U.S. property/casualty insurers. This table shows how “ordinance or law” coverage for the increased cost of reconstructing property to current building and land use regulations is allocated under current ISO forms. When purchasing coverage or settling claims, keep in mind that insurers may use older versions of these forms, or proprietary forms that differ in some ways from them. In virtually all cases, ordinance or law coverage is predicated on these conditions: • The structure in question is covered under the policy; • The damage is caused by a peril insured against under the policy; • The ordinance or law being enforced regulates building construction; and • The loss does not result from an earlier failure to adhere to an ordinance or law. Form CP 00 10 Building and Personal Property Coverage Form (base form for a commercial property policy) CP 10 20 Causes of Loss, Broad Form (named perils version of essential coverage part to commercial property policy) CP 10 30 Causes of Loss, Special Form (open perils version of essential coverage part to commercial property policy) CP 04 05 Ordinance or Law Coverage (optional commercial property endorsement) CP 04 46 Ordinance or Law Coverage (optional “BOP” endorsement) CP 00 30 Business Income (and Extra Expense) Coverage Form (optional coverage for revenue lost or extra expenses incurred during suspension of operations due to covered loss) CP 15 31 Ordinance or Law - Increased Period of Restoration (optional endorsement for expanding definition of period of restoration) CP 04 09—Increase in Rebuilding Expenses Following Disaster (optional endorsement to address “demand surge” situations) Provisions regarding costs to comply with building ordinances or laws Includes additional coverage under the building limit for “increased costs of construction” incurred to comply with minimum standards of a building ordinance or law. The built-in limit is the lesser of $10,000 or 5% of the applicable building limit. No reference to costs incurred in response to enforcement of ordinance or law. Expressly excludes coverage for loss or damage arising from the enforcement of or compliance with any law or ordinance. Adds coverage for loss to undamaged portion of an insured building, accompanying costs of demolition and debris removal, and increased cost of reconstruction. The equivalent of CP 04 05 for Businessowners policies that combine property and liability coverage for small and midsized commercial accounts. Definition of covered “period of restoration” expressly excludes any increased period of time required due to enforcement of or compliance with building ordinance or law. This efectively excludes income and extra expense coverage for ordinance or law losses. Expands the period of restoration to include additional time required due to enforcement of or compliance with building ordinance or law, thus closing a gap in coverage under CP 00 30. Provides additional insurance to cover increased building costs following a federally or state-declared disaster. Allows up to 20% of the additional insurance to be used for coverage provided under Coverage C of CP 04 05.
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