It is likely that your older building complied with all applicable building codes when it was originally constructed. However, unless it has undergone major renovations or upgrades since then, it probably does not meet current building standards — and is generally not required to until significant restoration or renovation work becomes necessary.
What many commercial property owners do not realize is that standard property insurance policies often contain an exclusion that denies coverage for the additional costs of complying with current building codes and local ordinances after a loss.
For example, if lightning strikes the building and damages only a small portion of the original electrical system, local building codes may require a complete rewiring of the entire building to meet today’s standards. In that case, the insurance company would typically pay only for repairing the damaged section and leave you responsible for the much more expensive code-upgrade work.
If you own a commercial building that is twenty years old or older, I strongly recommend speaking with your insurance agent or broker. They can determine whether your policy already includes — or whether you should add — an endorsement for Ordinance or Law Coverage (also known as code upgrade coverage). This protection can help shield you from significant out-of-pocket expenses following a covered loss.
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Hi there. I like this post; very helpful to older commercial building owners. The roof of my apartment complex is around 22 years old. So, I wonder if insurance plans will still cover my building. I know that 20 years is the common cut-off age for insurance roofs since it is the average lifespan of flat roofs and shingle roofs. If I add a new layer to the 22-year-old flat floor, will this remain uninsurable?
That Is a question you should direct to either your insurance provider or broker. There is no single answer that fits every policy or condition.
Your insurance policy is a contract between your insurance provider and yourself. It is best for you to discuss this with your agent before you incur a loss to ensure that your contract provides you with all the coverage you want and need.