Your policy should have a coverage known as Ordinance or Law. Ask your broker if you have it and if so, how much? You can increase that amount if necessary.

Thanks!

Hi,

A $500,000 limit on "Ordance or Law, ICC & Demo" coverage for three building complex built in the 1950's doesn't pass my initial sniff test as generous. Rather, it sounds like a lot of risk exposure. Would you agree?

Thanks!

Can't help you there. I imagine that to get an accurate number, you'd need some professional (architect, contractor etc) help.
Perhaps you should ask your broker for the cost to increase that coverage to $1,000,000, and if reasonable buy it as "sleep insurance".

If the three buildings are stand alone, i.e., not adjacent to each other, what is the likelihood that the three buildings will catch on fire at the same time or will be leveled by a bomb or a plane? Again, $500,000 may be enough or not enough according structures, etc.

AdC

Interesting question... Insurance coverages are predicated on partial losses not total losses of a structure. Therefore, a building that requires $20 million to construct from the ground up, according to square footage may be covered by a policy of $10 million.

In doing your risk analysis and whether you should take a much larger value, you may wish to consider your structure: fireproof v. fire-resistant, general layout, etc.

To find out the cost of your total replacement and what would be the adequate amount of coverage that you are willing to pay for, you should know the current cost of construction per square foot and the square footage of your building f or a rough calculation. Your engineer should be able to provide the current cost of construction per square foot.

Hope this may help you.

Better make sure you won't be subject to a coinsurance penalty by underinsuring.
Speak to your broker.

Well,

I want to thank everyone for their comments: as I understand more, the better questions I can ask.

Our fire insurance policy has a $5 million ordinance/law coverage limit but our boiler insurance has only $500k. So I am inquiring on increasing the limit on that policy until I can get better information on replacement costs. I would imagine that a boiler ‘issue’ might cause damage to surrounding buildings too (ugh – reaching for the Advil).

We are masonry/steel constructed with wood studs between units (both vertical and horizontal).

Working in the real estate insurance business for many years, I’ve never heard of taking 50% of the replacement cost. And there is 2 main reasons for that. #1 most insurance companies require you to have at least 80% replacement, and if you don’t then you have a co-insurance penalty. #2 what if your building suffers a catastrophe and the building is completely destroyed, who is gonna carry that 50% loss???