business property and compliance coverage

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PostPosted: Mon Jan 25, 2010 7:17 am   Post subject: business property and compliance coverage  

A motel had undergone some damages due to the flood waters in Littlerock



and also while during the clean up. We've been advised to look for business



property coverage. Will it also cover for flood and storms? Also, please guide



us regarding the importance of compliance coverage.


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PostPosted: Tue Jan 26, 2010 7:24 am   Post subject:   

Well, it has something to do about the building code laws. Most property policies won't cover you for the expenses incurred while upgrading your building structure. Compliance or ordinance coverage could really serve the purpose. You could have it as an individual policy or an endorsement.

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PostPosted: Wed Jan 27, 2010 5:57 am   Post subject:   

Your Business property insurance benefits should be able to help you in reconstructing the building structure and towards replacing your fixtures.



Don't get confused between this one and your evaluation of property taxes. This is all about an estimation of your entire replacement cost.

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PostPosted: Tue Jul 13, 2010 2:28 pm   Post subject: Insurance Compliance  

I am not sure what you mean by compliance. Flood insurance is usually a separate policy mandated by the government. If you are talking about Law and Ordinance coverage, this coverage would be a separate coverage added to your commercial insurance (some have it built in) that would cover any additional things that may be required such as a handicapped ramp (this may not have been required by law or ordinance when the building was first built) Also, central station alarms, lit exit signs etc.. A regular policy (unless it has some included coverages) will not cover you for the added expense of these required upgrades.



Does this answer your question?

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PostPosted: Tue Jul 27, 2010 9:55 pm   Post subject:   

Quote:
Most property policies won't cover you for the expenses incurred while upgrading your building structure. Compliance or ordinance coverage could really serve the purpose.




Quote:
that would cover any additional things that may be required such as a handicapped ramp




Actually, this is a specific exclusion under Ordinance & Law. Same goes for remodeling a bathroom to be compliant with the ADA. Ordinance & Law will cover building code upgrades required by law if a structure suffers a covered loss and is being rebuilt. Such things could include different electrical wiring, sprinkler systems, emergency lighting, insulation, etc. Mere "upgrades" to satisfy building or other municipal codes without a covered loss involved is not covered by O&L or any other part of the policy.



However, if a building permit following a covered loss cannot be issued without these changes, then O&L coverage will apply. Sometimes it would be necessary to modify undamaged portions of a building to comply with current codes, and the O&L will pay for that, if it is a requirement to obtain the building permit.



But just because the ADA or a city/county ordinance is enacted and requires immediate compliance, is not a reason that O&L will pay a claim. That's the specific exclusion -- it's simply one of the hazards of being in business in a particular place.



When it comes to flood damage to a structure, that is only covered by a National Flood Insurance Program policy. Anyone can purchase such a policy, but it is required by lenders if a property is located in a designated flood area. If I am not mistaken, changes to federal law also prohibit FEMA from making disaster loans to property owners in flood areas who suffer losses and who failed to purchase an NFIP policy prior to the loss.



According to the NFIP website, up to 25% of all flood losses annually occur outside designated flood areas. Property losses in these areas are not covered by standard property policies, commercial or otherwise. Only property covered by an inland marine floater would have such coverage. (And you don't purchase inland marine policies on structures.)


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