A little-known but very useful insurance coverage for small- to midsize-business owners is Ordinance and Law coverage.

Generally lacking in simple commercial coverage, this basically is additional property coverage available to building owners and landlords of either residential or commercial units.

Ordinance and Law coverage fills the gap in your property coverage if you own a building that is 25 years old or older which many Orange County properties are.

If you have a partial or total loss of your building, property insurance will cover only the repair or rebuild of the structure. Typical commercial policy will not cover any upgrades that need to be done to comply with today's building codes or changes in ordinances.

A common classic example would be a requirement to install wheelchair ramps on the rebuilt portion of the building. If the ramp wasn't there at the time of a loss, then property coverage will not pay for it.

Ordinance and Law closes that gap in coverage. If adding a ramp is required by law, the Ordinance and Law coverage will pick up the cost of building a ramp to meet current code.

Building codes could require any number of changes: installing sprinkler systems; updating fire walls in apartments; accommodating fire codes for safe evacuation in the new structure; and making a building strong enough to sustain an earthquake, heavy weather, high winds or floods, and the list goes on as building commissioners change and evolve codes.

Ordinance and Law coverage is broken down into three sections:

Coverage A - Loss to the Undamaged Portion of the Building:

If there is a partial loss of 50% of the building, many cities and towns want you to demolish the entire building and rebuild according to today's codes.

The coverage will pick up the cost to replace that undamaged portion of the building.

Accordingly, the limit of coverage is usually the same as the building limit listed in the Property coverage.

Coverage B - Coverage for the Cost of Demolition:

Now that you have to demolish an entire building that was only partially damaged, your expenses just skyrocketed, right? No. Coverage B will pay for bulldozing the undamaged portion of a building. This limit of coverage is usually a percentage of the building limit coverage.

Coverage C - Coverage for the Increased Costs of Construction:

This is the portion of coverage that pays for making all the changes that bring the building up to code. This limit would be determined by the amount you would need to make any changes.

This might take a bit of research of your town's laws to see what changes you would need for your building. But it is time well spent should a loss occur.

Once changes have been made, you can adjust your building limit to include the new total value of your "up to code" building.

However, it is still wise to keep Ordinance and Law coverage, since laws are moving targets.

You don't want to be caught short at the time of a loss if you need to comply with new building codes.