Building Ordinance or Law Coverage protects the association against losses resulting from enforcement of any existing building or zoning laws in which additional costs are incurred or because of a requirement to rebuild or demolish a building.
Example: A building in a flood zone is destroyed and must be rebuilt. Because the building is in a flood zone, a city ordinance requires the new building to be elevated 8’ above ground. This requires the building to be on pilings. The 8’ elevation requirement places an additional cost to rebuilding that is not covered in the association’s flood insurance policy.
Example: A city’s building code states that if 50% of the building needs to be replaced, the entire building must meet 100% of current building code requirements. In this instance, the association might have to install new sprinkler systems, fire alarm systems, impact resistant windows and a roof that can withstand specified wind speeds. Repairs to an older building may require upgrading electrical and heating systems, ventilation and air conditioning systems and plumbing units. In this example the additional cost of bringing 100% of the building up to code are not covered in the association’s general hazard insurance.
FEMA 50% RULE
The FEMA 50% rule states that if an improvement is “substantially damaged” or “substantially improved by the owner”, it must be rebuilt so that it is out of the 100-year flood elevation. Most communities in Southwest Florida apply the Collier County code (Z101-0410) that defines “Substantial Damage” as “damage of any origin sustained by a structure whereby the cost of restoring the structure to its before damage condition would equal or exceed 50 percent of the market value or replacement cost of the structure before the damage occurred”. The code further defines “Substantial Improvement” as “any reconstruction, rehabilitation, addition, or other improvement of a structure, the cost of which equals or exceeds 50 percent of the market value of the structure before the start of construction of the improvement.”
The basic hazard or flood insurance appraisal calculates the cost to replace the existing buildings. Essentially, what is there now. The Ordinance and Law update compares what is there now to the current building code and calculates the additional costs to bring the building up to code.
Building Ordinance or Law Coverage protects the association against losses resulting from enforcement of any existing building or zoning laws in which additional costs are incurred or because of a requirement to rebuild or demolish a building.
Example: A building in a flood zone is destroyed and must be rebuilt. Because the building is in a flood zone, a city ordinance requires the new building to be elevated 8’ above ground. This requires the building to be on pilings. The 8’ elevation requirement places an additional cost to rebuilding that is not covered in the association’s flood insurance policy.
Example: A city’s building code states that if 50% of the building needs to be replaced, the entire building must meet 100% of current building code requirements. In this instance, the association might have to install new sprinkler systems, fire alarm systems, impact resistant windows and a roof that can withstand specified wind speeds. Repairs to an older building may require upgrading electrical and heating systems, ventilation and air conditioning systems and plumbing units. In this example the additional cost of bringing 100% of the building up to code are not covered in the association’s general hazard insurance.
