Ordinance or Law CIC 953 - The Commerce Insurance Company

Ordinance or Law CIC 953 - The Commerce Insurance Company
Massachusetts Commercial
Property Manual
Manual Effective Date: 05/01/13
Ordinance or Law CIC 953
This endorsement covers losses which result from the enforcement of laws or ordinances
(building codes) controlling the restoration of a building after a covered loss. To be eligible
for this optional coverage, a building must have been fully renovated within the last 25 years.
(Click here to refer to the General Guidelines and Rules.) In addition the building must be
insured to 100% of its replacement cost. There are three coverages:
• Coverage A - Loss to the Undamaged Portion of the Building
Many communities have building codes that require that the undamaged portion of a
building be demolished if a loss exceeds a certain percentage of a building’s value. This
coverage extends the Building Limit to cover loss to the undamaged portion of the
• Coverage B - Demolition Cost
A separate limit of insurance can be purchased to cover the cost to demolish the
undamaged portions of the building if required by a building code.
• Coverage C - Increased Cost of Construction
A separate limit can be chosen to cover the increased cost of construction due to
requirements to bring a building up to current code.
Ordinance or Law Coverage
Building Limit is $100,000
Liability Limit is $300,000
Demolition Cost is $50,000
Rating Example
Increased Cost of Construction is $40,000
Mercantile Building Base Rate is 9.39
Coverage Factor is 1.11
For simplicity, this example assumes the Building and Contents modifier does not apply.
Coverage A Coverage B Coverage C -
Coverage for Loss to the Undamaged Portion of the Building.
Demolition Cost Coverage.
Increased Cost of Construction Coverage.
Building Base Rate x Ordinance or Law Factor x [Building Limit + Demolition Limit +
Increased Cost of Construction limit (in thousands)] = Building and Ordinance or Law
Coverage Premium combined.
9.39 X 1.11 X [100 + 50 + 40] = $1,980
© 2010 The Commerce Insurance Company. All rights reserved
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