Insurance News: Important Coverage Update for Apartment Owners
Insurance News: Important Coverage Update for Apartment Owners
Abstract
Most carriers refer to the three parts as parts "A," "B," and "C" although some will call them parts "1," "2" and "3." Part A - Undamaged Portion of the Building Let's use the example of a $3,000,000 building that was 50% destroyed, where local building code requires that the undamaged remainder of the building be demolished. Your policy will not pay for the undamaged portion of the building that must be demolished unless you've purchased Ordinance and Law Coverage Part A. When purchased, "Part A" is usually written to the full value of the building. All buildings, new and old, can benefit from Ordinance and Law Coverage Part A. Part B - Demolition Your policy will pay for the hauling away of the rubbish and rubble created when half of the building was destroyed - but it will not pay to demolish the undamaged portion of the building and clear the site. We usually recommend purchasing at least 10% of your building's replacement value in Part B coverage. Part C - Increased Cost of Construction It's time to get building! Let's look at some different possible scenarios. Your building is completely destroyed, and local building code does not allow for the reuse of the foundation and pilings, underground pipes, flues, drains, grading, excavation, etc. As a rule of thumb for bringing a building up to code, it costs about 0.5% to 1% for each year of a building's age.