Small Business Insurance Supplemental Coverages Buildings
Small business insurance supplemental coverages can provide automatic protection for newly acquired buildings and/or contents. Every carrier has different limits for this newly acquired property. It is a marketing ploy for the carriers to differentiate their products from others. The limits for newly acquired buildings can range anywhere from $100,000 to usually not more than $1 million for automatic coverage. There is usually a timeframe for the newly acquired properties with the most common timeframe being 90 days of automatic coverage. Some carriers try and make their contracts unique by extending that up to six months or even a year.
Almost all polices do not ask extend any coverage for newly acquired buildings or contents pass the policy expiration date. So, if you purchase a new building on January 1st and your policy renews on February 1st, the usual 90 day automatic extension of coverage will not be extended into another policy term. If the policy renewal date is not a problem, you will have a problem if at the end of the automatic newly acquired property time limit expires; you will have no more coverage. You need to report and declare the values for the new property before the automatic time period ends. Clearly the definition of newly acquired buildings and contents can be murky waters because escrows, real estate transactions, and possessing the property can all be at different times and dates.
Another supplemental coverage that is sometimes included but most of the time not included automatically is that of ordinance or law coverage. Building ordinance or law coverage helps protect you as the insured from regulations that are mandated by Federal, State, County or local governments or government entities.
Usually these types of laws and regulations have to do with two types of areas of law after a substantial loss. If there is a loss to the building and it is more than 30% damage to the building, most ordinance laws come into the mix. The ordinance or law might require that if the building is damaged more than 30% that you demolish the entire building. The percentage such as 30% damage to the building or whatever percentage the ordinance uses to trigger its enforcement can also require that any repair or rebuilding has to include the most current building code requirements.
While you might have coverage to replace and repair the damages to the building, but if you do not have building ordinance or law coverage you will not have the extra costs involved in replacing up to current standards as required by law. Sometimes the building that you have the insurance on might have been grandfathered in because of the age of the building with regards to local building codes. Once you sustained a substantial loss, usually 30% that will allow the government entity the ability to enforce its current building code regulations and laws. This coverage, while not as obvious as the dollar amount listed for the limit of your building property coverage, can be a substantial part of your overall protection.