Demolition insurance is a type of insurance protection that makes it possible to absorb the costs of tearing down a building that has been damaged beyond the point of repair. Sometimes referred to as a named perils of insurance policy, the coverage aids in razing structures that have been damaged by fire, wind or some other event and are no longer safe for use. Often, this type of insurance works hand in hand with personal and commercial property insurance to not only level the damaged building, but also to remove the debris from the building site.
One of the main benefits of demolition insurance is that it provides the resources necessary to remove a damaged structure from a piece of property. Most insurance contracts with this type of coverage call for inspection of the structure before the final razing is undertaken. Once both local authorities and the insurance company agree the damaged building is beyond repair and poses a threat to public safety, a crew is engaged and the building is leveled.
Some types of demolition insurance not only provide resources for tearing down structures damaged in a disaster, but also cover the costs of having the debris from the building removed from the property. In some cases, the owner’s property insurance will cover this aspect of the project, even though that insurance does not cover demolition. Should the property insurance cover the charges for hauling away the debris, that policy is considered the primary coverage for that portion of the project, with the debris removal provisions in the demolition insurance classified as secondary. This means that any costs not covered by the primary coverage may be further offset by the coverage in the secondary policy.
As with all types of insurance, any claims submitted on a demolition insurance policy must meet the qualifications named within the terms of the policy itself. For example, if a building is partially destroyed by fire, the insurance provider may not honor the claim until the property is inspected and the building is considered a total loss. Some providers will also require that local authorities examine the property and declare it unsafe for use and beyond the potential for repair as a means of bring the building back into compliance with local safety codes. For this reason, understanding local building codes and the exact provisions of the policy before securing demolition insurance is extremely important.
