What it does
After a widespread disaster, demand for contractors and materials can push repair costs above the building's limit. CP 04 09 provides Additional Expense Coverage for scheduled buildings under CP 00 10 or CP 00 17. It pays the increased labor and material expenses actually incurred when all of these conditions are met:
- The event causing the covered loss led to a federal or state disaster declaration, or occurred close in time to the declared event.
- Labor or material expenses rose because of the disaster, and total repair cost exceeds the limit because of that increase.
- The insured repairs or replaces the building.
- The insured reported, within 30 days of completion, any improvements that raised replacement cost by 5% or more, so the limit could be adjusted.
Key provisions
- The maximum additional amount is the scheduled percentage applied to the building's limit (adjusted for inflation guard if it applies). For blanket insurance, the percentage is applied to the building's value on the latest statement of values, adjusted by the coinsurance percentage.
- The coverage is written on an annual aggregate basis.
- Covered causes of loss follow those otherwise applicable to the building.
Quoting and selling notes
- Even an accurate replacement cost limit can fall short after a regional catastrophe. This endorsement addresses that gap.
- It does not cover code-upgrade costs (CP 04 05) or underinsurance from outdated values.
