Does the policy require the insured to be compliant with code before the law and ordinance coverage is offered? Wouldn't this void the need for L&O? I've attached the denial letter and will email you the policy once requested as it is too big a file to attach here.
Texas Subscriber
On page 10 of the BOP and on page 19 of the WB 2905 12 20 the policy clearly states that: Under this Additional Coverage, we will not pay any costs due to an ordinance or law that: (a) You were required to comply with before the loss, even when the building was undamaged; and (b) You failed to comply with.
The preceding clauses are as follows: (1) This Additional Coverage applies only to buildings insured on a replacement cost basis. (2) In the event of damage by a Covered Cause of Loss to a building that is Covered Property, we will pay the increased costs incurred to comply with the minimum standards of an ordinance or law in the course of repair, rebuilding or replacement of damaged parts of that property, subject to the limitations stated in Paragraphs (3) through (9) of this Additional Coverage.
What the policy does is exclude coverage if the insured knew that the building was not in compliance with local ordinances and did nothing to make the necessary upgrades. This is different from a building owner not being aware that the building is outside of compliance with local codes because the insured has owned the building for several years and was unaware of the code changes.
In this loss situation, the insured knew the flashing was out of code and subject to a maintenance issue. The policy is not designed to provide coverage for known building issues prior to the loss, so the denial is warranted and coverage is excluded.