Commercial property insurance can help pay for the portion of the covered property that has been destroyed. With the ordinance or law coverage endorsement added to your policy, it will cover the remaining amount needed to restore the property back to whole and in compliance with the latest building codes. For example, if a fire in your commercial building damages only 65% of your roof, your property insurance would only cover the damaged portion needed to be restored. Since you’ll need a whole new roof, not just 65% of a roof, your Ordinance or Law Coverage A would kick in to help pay for the remaining 35% or the undamaged portion.
Coverage B is related to Coverage A in that it also deals with the undamaged portion of a commercial building, but it helps cover the costs related to the demolition of the undamaged portion. For example, if your bakery has a fire and the building code requires you to tear down the entire structure after a fire, but only 60% of the structure was damaged, your standard commercial property insurance would only reimburse you for the 60%. If you don’t have Ordinance or Law Coverage B, you’d have to pay for the remaining 40% out of pocket. With Ordinance or Law Insurance Coverage B, you’re financially protected against the costs of demolishing and removing debris from the undamaged portion of your building.
Ordinance or Law Coverage C provides coverage for any building enhancements that are required if the building code has changed since the time of the construction of your commercial building. For example, if new building code requires that your commercial space must have fire sprinklers, this coverage would help pay for the installation of the fire sprinklers. If you don’t have this endorsement, you’d have to pay for these repairs out of pocket to meet the new building code requirements.