Property · Insurance Term
Demolition Cost Coverage (Ordinance or Law Coverage B)
Definition
Demolition cost coverage pays to tear down and clear the undamaged part of a building when a building code or ordinance requires it after a covered loss. It is usually Coverage B of an ordinance or law endorsement, and standard property forms don't include it.
In Plain English
Many local codes can require a damaged building to be torn down completely when damage is severe enough. Your property policy pays for the damaged part, but not to demolish the part that survived. Demolition cost coverage pays that extra expense.
It is one of three parts commonly sold together as ordinance or law coverage (form CP 04 05 Ordinance or Law Coverage). Coverage A pays for the value of the undamaged part you lose, known as loss to undamaged portion. Coverage B pays to demolish it and clear the site, and Coverage C pays the increased cost of construction to rebuild to current code.
Demolition cost is separate from debris removal, which clears the remains of the damaged part. Older buildings and those in areas with strict codes are most likely to need these coverages.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical and simplified: A 1970s strip center has a fire that damages 60% of the building. The city requires the rest to come down so the center can be rebuilt to current code. Demolishing the undamaged 40% costs $120,000. Without Coverage B, that cost may fall on the owner.
What to Watch For
- Ask whether your policy includes ordinance or law coverage and how Coverage B is limited.
- Ask your city or an engineer whether local rules could require full demolition after partial damage.
- Check whether Coverages B and C share one combined limit.
- Review your loan documents, since lenders often require ordinance or law coverage.
Last updated October 14, 2026 · Primesure editorial team · How We Write