\n<\/p>\n
When it comes to protecting your home, business, or investment property, there\u2019s one essential coverage that many property owners overlook regarding Ordinance or Law (O&L) coverage. Insurance agent expert and educator\u00a0David Thompson, in a comment to a discussion on Property Insurance Coverage Law, highlights a common and critical misconception and highlights that newly constructed buildings need coverage for building laws and ordinances:<\/p>\n
\nAs I teach classes on Ordinance or Law, I find a common misconception that newer structures don\u2019t need this coverage. That, of course, is incorrect.<\/p>\n<\/blockquote>\n
The Danger of Underestimating Ordinance or Law Coverage<\/strong><\/h3>\n
Many property owners assume that if their building is newer, updated, or even code-compliant at the time of construction, Ordinance or Law coverage isn\u2019t necessary. However, Thompson stresses that this view is dangerously incorrect. Building codes change regularly, and what was compliant even a few years ago might not meet today\u2019s stricter standards. After a partial loss, new codes could force you to demolish undamaged portions of your property\u2014or rebuild entirely\u2014in compliance with the latest regulations.<\/p>\n
Thompson explained:<\/p>\n
\nOne of the most valuable coverages under O&L is for the undamaged portion of the building. You could have a $300,000 house with $160,000 in damage and the code might require demolition of the whole structure.<\/p>\n<\/blockquote>\n
Imagine suffering partial damage to your property, only to be told you must demolish the entire building, even the undamaged parts, without adequate coverage to pay for it. It\u2019s a financial disaster waiting to happen. That is what happened to the policyholder in yesterday\u2019s post, Insurance Coverage After a Raze Order: Strategies for Overcoming Ordinance or Law Exclusions<\/a><\/em>.<\/p>\n
Relying on Legal Doctrines Is Risky<\/strong><\/h3>\n
While some might think they can lean on Florida\u2019s \u201ctotal loss\u201d legal concepts to force full payment from insurers, as I noted in Law & Ordinance Exclusions and Coverage and Constructive Total Loss\u2014A Florida Perspective<\/a><\/em>, Thompson issues a caution:<\/p>\n
\nYou might try to rely on the \u2018total loss\u2019 concept pointed out in the blog, but I\u2019d submit there is a good chance that involves a long court battle. The \u2018easy button\u2019 is to have maximum O&L coverage.<\/p>\n<\/blockquote>\n
Litigation is time-consuming, stressful, and costly. Having robust coverage ensures you\u2019re protected without going through drawn-out legal fights that could delay rebuilding your home or business.<\/p>\n
The Real-World Consequences: E&O Claims<\/strong><\/h3>\n
Thompson shares a telling insight from his experience with Florida\u2019s insurance industry:<\/p>\n
\nLate each year, I receive a list of the errors & omissions claims the agency members of the Florida Association of Insurance member agencies. Since Hurricane Irma hit a few years back I\u2019d estimate there have been over a dozen such E&O claims.<\/p>\n<\/blockquote>\n
An \u201cE&O\u201d (Errors and Omissions) claim typically arises when an agent fails to properly advise a client about necessary coverages. If there have been over a dozen claims, that implies countless more consumers suffered financially but didn\u2019t pursue claims due to a\u00a0lack of documentation or simply because they didn\u2019t realize they could.<\/p>\n
Maximize Your Ordinance or Law Coverage Because It Is Affordable <\/strong><\/h3>\n
Finally, Thompson provides a practical recommendation:<\/p>\n
\nAnyone buying any type structure should purchase the maximum O&L available. For most homeowners, that probably costs less than the cost of one Starbucks per week.<\/p>\n<\/blockquote>\n
He claims that for less than the price of a cup of coffee, you could have peace of mind that your largest investment, your home, business, or investment property, is fully protected against the unforeseen costs of rebuilding to new codes.<\/p>\n
The bottom line is that whether your property is new, old, residential, or commercial, maximize your Ordinance or Law coverage. It\u2019s an inexpensive safeguard against one of the most financially devastating gaps in insurance. It is hard to anticipate how losses may occur, and it is smart to protect yourself from future headaches, which are relatively inexpensive.<\/p>\n
For Insurance Coverage Nerds and anybody selling or advising what type of property insurance coverage should be purchased, I suggest you study The Importance of Revising Building Laws and Ordinances, Which Explains Why Law and Ordinance Coverage Law is So Important To Purchase<\/a><\/em>, Law and Ordinance Coverage C Limits of Coverage\u2014How Much to Obtain<\/a><\/em>, and What Does Demolition and Value Mean Under Coverage A of the Ordinance and Law Coverage?<\/a><\/em><\/p>\n
Thought For The Day <\/strong><\/p>\n
\u201cI miss the utopian spirit. Now, it\u2019s just: get the building done before the lawsuits start.\u201d<\/em><\/strong>
\u2014Rem Koolhaas<\/em><\/p>\n<\/p><\/div>\n