After a lengthy adjustment involving numerous inspections,
intense negotiations, and supplemental payments, a claims
professional is about to close a particularly grueling file. Then a
fax arrives. The insured submits a supplemental claim in excess of
$1 million for "code upgrades" involving new electrical
wiring, thicker concrete foundations, and new HVAC systems. None of
these areas were damaged in the incident or previously raised in
the claim. Aghast, the claims professional turns to the
"ordinance or law" coverage to find out what exactly is
covered by the policy.
The term "ordinance or law" in code-upgrade provisions
generally encompasses government-mandated requirements only. This
includes statutes or building codes adopted at the state, federal,
city, or local level. However, the mere existence of a building
code, such as the BOCA standards and the National Fire Protection
Association (NFPA) guidelines, are not ordinances or laws within
the scope of coverage
