Our insured has an office building insured on a commercial property form for $125,000 on a replacement cost basis. There is a 64' x 64' warehouse located behind it. The warehouse is not insured for any additional amount. When the current owner purchased the building two years ago, he simply transferred the insurance, with the company's approval.

There is an additional coverage in this form (it is not a standard form) that allows the insured to apply up to 5% of the limit of liability shown for coverage A—Buildings to other structures on the insured premises that are not attached to the insured building by more than a utility line, fence, or similar connection. That gives $6,250 coverage for the warehouse.

Recently the warehouse was nearly destroyed by a high wind, with the result that the local building inspector has ordered it to be demolished and the debris removed. The adjuster states that the $6,250 is the most that will be paid; in short, the $6,250 is the policy limit including the amount necessary for debris removal. Our insured has an estimate of $7,850 just to demolish the warehouse and haul away the debris, to say nothing of what it will take to replace the structure.