What it does
CP 04 38 changes how a scheduled building is valued and limited under CP 00 10 or CP 00 17. The limit in the endorsement's Schedule is the only limit for that building, and the coinsurance condition does not apply to it.
If the insured contracts to repair or replace within 180 days (unless otherwise agreed) for the same occupancy and use, the insurer pays the smallest of:
- The scheduled limit.
- For a total loss, the cost to replace with a less costly building that is functionally equivalent.
- For a partial loss, the cost to repair with less costly material in the prior architectural style, plus demolition of undamaged parts.
- The amount actually spent.
If the insured does not rebuild, the insurer pays the smallest of the limit, the building's market value excluding land, or repair cost with less costly material less depreciation.
Key provisions
- Built-in ordinance or law coverage, with an optional post-loss ordinance or law option, applies to the scheduled building.
- Other insurance on the same basis shares pro rata. Other insurance is otherwise excess.
Who needs it
Owners of buildings that would cost far more to reproduce than they are worth or than the owner would spend. Examples are ornate churches, 19th-century commercial blocks, and old industrial buildings in low-value markets. Full replacement cost limits on such buildings may be unaffordable, and actual cash value may undervalue them.
Quoting and selling notes
- Explain that the client gets a functional replacement, not a replica. Historic or ornamental features will not be reproduced.
- Check lender and historic-preservation requirements before using it.
- CP 04 39 is the personal property counterpart.
