When (and Why) Partial Losses Become Total Losses
Christopher J. Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS
August 23, 2017
1:00 p.m. to 3:00 p.m. Eastern Time
We do a bad job explaining the concept of "replacement cost." We tend to tell clients they will get new stuff for old junk – which is partially true; but partial truths get you sued.
One roadblock to replacement cost is building codes – or what we insurance practitioners refer to as ordinance or laws. Unendorsed policies offer only a VERY limited amount of coverage for the increased costs to rebuild due to these ordinance or laws. When your insured is forced to pay these additional costs out-of-pocket, they are going to be MAAADDD!
We detail the coverage problem, the coverage gaps, and how to fix these problems in this session.
Insureds CANNOT depend on the unendorsed commercial property policy (CPP) to cover ALL rebuilding expenses. Few commercial structures fully meet local building code requirements; and the older the building, the further out of compliance the building is. Non-compliance with local building codes can cost your insured many thousands of dollars following a major property loss.
Essentially, local building codes can turn a partial real property loss into a total loss. Following a "major" loss, building code officials can require the undamaged portion of the structure to be demolished and removed from the site and the new building to be built in compliance with all local building codes. The unendorsed CPP only pays the cost to remove and rebuild the damaged portion of the building. There is NO coverage for any of the other expenses related to the undamaged part.
Attendees in this session learn:
- The coverage gaps in property policies making Ordinance or Law Endorsements necessary;
- Who promulgates and who enforces local building codes;
- What constitutes "major" damage;
- The details of various ordinance or law endorsements; and
- How to develop coverage limits for each coverage part.
*Webinar transcript will be emailed to all registrants within four weeks of the live event.