Building Ordinance or Law Coverage

Apr 15, 2019 | Main Blog

Erie Insurance is offering Building Ordinance or Law Coverage for policyholders who have Homeowners, Rental Property and/or Business Property policy. Many cities, boroughs, and townships now have building codes that dictate how a new building must meet certain construction requirements.

Existing buildings that do not meet these requirements face special property exposure. If a building is damaged or destroyed, the local building codes may state that the building must be rebuilt to conform with current codes. This coverage endorsement helps to bridge the gap in coverage by providing the following:

  1. Demolition cost: The cost of demolishing the undamaged portion of the building will be covered when it is required by the building ordinance.
  2. Coverage for loss of value to the undamaged portion of the building: Many building codes require that a building that is damaged beyond a stated percentage (ex.50%) and does not meet current building codes cannot be repaired to the same condition prior to the damage. The building must now be replaced to meet current codes specifications. This creates a gap in coverage because a 50% loss would be a partial loss under the policy, but would be a total loss to the insured.
  3. The increased cost of construction: Replacing an existing building with one that conforms to local building codes is usually more costly than replacing the existing building. The costs associated with such changes include not only the physical materials but also the cost of redesigning the building with the new features. This endorsement would cover the difference in cost. Please contact our agency if you would have any questions or would be interested in adding this valuable coverage.

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