If you experience a loss will your insurance compensation be adequate for you to rebuild?

The one constant in life is change, this holds true for building regulations. It is impossible to foresee what new regulations may be enacted. In the event of a loss new ordinances and laws can have a significant impact on the cost of rebuilding. Ordinance and law coverage will provide compensation for expenses created by new legislation, however not all marine insurance policies include ordinance and law coverage.

How important is ordinance and law coverage for marine business owners?

If you own a building and something happens to the property, your insurance replacement costs may not be enough to cover upgrades or changes required by ordinances or laws to ensure that the structure meets current building codes.

If you have to rebuild or repair a building to meet current building codes and ordinances, but your commercial property insurance specifies “like kind and quality” (in other words, as it existed before the loss), you may have to pay out of pocket to comply.

It is possible, particularly with older buildings, that local laws and ordinances will require the structure to be rebuilt with features different from the original building. Common upgrades might include plumbing, electrical, or heating and cooling systems.

Sometimes the valuation for the marine business insurance will cover the costs to rebuild, but it may not and then the owner will have to pay for the changes that meet current building codes.

If marine business owners carry building ordinance or law coverage, they are protected when:

● A building is partially damaged but the law requires the undamaged part be demolished. The coverage will cover the loss in value for the undamaged part of the building and demolition of the undamaged section.
● Repairing or reconstructing both the damaged portion of the building and the undamaged portion (if demolition is required or not).

With laws and construction codes always subject to change, ordinance and law coverage is worth considering for newer buildings as well as aged structures.