Christopher Boggs

Ordinance and Law Coverage generates a lot of questions whenever I give a speech about the numerous building codes which impact construction. Christopher Boggs is a great insurance educator. Two chapters from his book, Wow! I Never Knew That!: 12 of the Most Misunderstood and Misused P&C Insurance Coverages, Concepts and Exclusions, provide some of the best explanations of this often misunderstood coverage. Insurance agents, property insurance adjusters, public insurance adjusters, and property insurance lawyers should have this book as a reference in their library.

Boggs notes that building codes and standards are created by hundreds of organizations that are adopted into law:

Other well-known construction codes emanating from the federal government include the requirements contained in the Americans with Disabilities Act (ADA) and the National Earthquake Hazard Reduction Program’s (NEHRP’s) model code detailing building methods designed to protect against earthquake damage in the various seismic zones.

Most building code standards, however, are developed and published by advisory organizations. A 1996 study by the National Institute of Standards and Technology (NIST) revealed that there are 93,000 standards put forth by nearly 700 distinct organizations (NIST Special Publication 806, Standards Activities of Organizations in the United States). These promulgated standards apply to all aspects of construction and building materials from acoustical tile to boilers to fire protection systems.

The best known of these advisory organizations is the National Fire Protection Association (NFPA). The NFPA maintains the National Electric Code, the Life Safety Code, and essentially all advisory codes related to fire protection. In addition to all of the above sources of construction-regulating building codes, there is a pseudo-governmental group of organizations very rarely considered when planning ordinance or law coverage: historical societies.

With all these organizations adopting new standards, it is no wonder why Ordinance and Law Coverage is so important. It is a huge coverage gap if not included in a property insurance policy.

Chapter 8 covers commercial coverages and includes a unique discussion of triggers of “major” damage which Boggs notes in part:

The Percentage Rule: Simply, this rule states that if the subject building is damaged beyond a set percentage of its value, the entire structure must be brought into compliance with the current building code. This percentage varies by state ranging from a low of 30 percent to as high as 60 percent.

Jurisdictional Authority Rule: Some state laws allow the authority having jurisdiction to decide at what point a structure has experienced “major” damage. This could be at 40, 50, or 60 percent of its value; or it could be based solely on safety, age, or zoning conditions. Several variations of this rule are used.

I am sending Boggs’ book as a gift to an opposing insurance defense attorney. The attorney’s market clients do not understand that the Law and Ordinance Coverage C they sold to their customer, my client, applies to the “cost to remodel the undamaged portion of the building if demolition is not required.”

Obviously, the cost of Boggs’ knowledge is very inexpensive compared to the value he brings. Do yourself a favor and purchase this book.

Thought For The Day

It is what you read when you don’t have to that determines what you will be when you can’t help it.
—Oscar Wilde

  • Bruce Holmes

    And then there are no standards when there should be.

    There are no currently accepted fire damage and restoration standards
    The Institute of Inspection, Cleaning and Restoration Certification (“IICRC”) is an ANSI accredited standards setting body and is undertaking development of three fire and smoke damage standards. It is expected that this will take some 2 years .

    Notwithstanding the assertions of many remediation companies to restore to pre-loss conditions, there are many variables that are involved and work accomplished with differing methods. The IICRC has a certification program for individuals and firms, but it is for specific individual competencies primarily related to flooring, fabrics and the disaster restoration industry . Their comparison of their standards to education requirements of professional skilled trades, medical doctors, and attorneys is “interesting”.

    “Just as certified accountants, plumbers and mechanics project a higher level of competency in their fields, and just as members of the American Medical Association and American Bar Association set themselves apart through training, experience and comprehensive examination — IICRC certification helps to immediately identify the cleaning, restoration and inspection industry’s most skilled and dedicated technicians and businesses.”
    There are currently no accepted standards for exposure limits or laboratory analysis for settled combustion products from a fire
    “No standards, regulations or exposure limits currently exist for settled combustion particles (char or ash) in indoor environments. Further, with the exception of ASTM D6602-13 Standard Practice for Sampling and Testing of Possible Carbon Black Fugitive Emissions or Other Environmental Particulate, or Both, which does not specifically address fire-related particles, there are no standards for laboratory analysis. Qualified laboratories may use different methodologies to arrive at their findings for a particular sample. Investigators should consult their chosen laboratories for guidance on methods of analysis. ”

    In another article from “Claims Canada”, the Professional Engineer author also indicates the same lack of regulations or guidelines .

    “From the perspective of an Environmental Engineer, the first step in remediating fire damage involves assessing and delineating the extent of the loss-related damage-but what do we do when the impacts are not always visible to the naked eye or when the impacts overlap with background levels? One might think that, much like asbestos, accepted guidelines or regulations would be in place to help navigate the
    assessment and remediation process.

    Unfortunately, this is not the case for potentially hazardous fire residues. While high-level guidelines exist for fire restoration, these guidelines are generally geared towards managing expectations during the process and providing basic cleaning guidance to contractors. How, then, can the environmental aspects of a fire claim be best managed in the absence of universally accepted best practices?

    Depending on the source, extent of combustion, and the nature of the materials impacted by a fire, myriad different chemical contaminants and residues can be released throughout a building or absorbed into porous contents. Contaminant residues can include soot, char, ash, and polycyclic aromatic hydrocarbons (PAHs). Soot, char, and ash are common combustion by-product residues that can be detected via microscopy on wipe samples collected from impacted surfaces. Soot consists of carbon-based and inorganic solids in conjunction with organic tars and resins, less than one micron in size. Char is particulate produced via incomplete combustion and is larger than one micron. Char can contain some of the original material’s structure, minerals, etc. Ash, in contrast to char, is the residue remaining after complete carbonization of the material. Ash does not maintain its original form.”

    Lack of full restoration will likely negatively affect the value of a fire damaged house

    There is no doubt that the owner of fire damaged home will be required to fully disclose the nature of any fire damage and the remediation actions taken to restore the property to a potential buyer. The work done to restore the property should be fully documented including replacements made, contractors used, permits obtained and photographs of the stages of the work.

    “Of course, you never want to try to cover up fire damage, no matter how long ago it occurred. Before putting a fire damaged home on the market, make copies of all documents pertaining to the fire, including insurance claims, police reports, and any repairs you have made. You want your agent to be able to tell prospective buyers about all the circumstances surrounding a fire. ”

  • Tim Varga

    Keeping in mind the difference between “up-grading” and “up-dating”. It can be confusing to most that there is a fact that remains that standard industry construction practices are not up-grades under o&l, they are requirements for all contractors to comply with and do not apply to changes in the structure that did not exists prior to the loss, that are now required due to new construction regulations.