Debris removal coverage is an insurance coverage that very few people understand, but is one that can cost you thousands of dollars without having the proper limit in place.
What is Debris Removal Coverage?
Debris removal coverage provides coverage for the cost of the removal of covered property damaged by a covered claim.
Most commercial property policies will provide two limits for debris removal: 1.) $10,000 in the event of a total loss or 2.) 25% of the claim amount for partial losses.
One of the things we recommend, though, is evaluating the standard limit to determine if that amount is enough to pay the actual cost of removing debris in the event of a claim. Here are some things to keep in mind when looking at a debris removal limit:
Fire debris in particular, and many other types of debris in general, must be deposited in a landfill. Demolition, haulage and landfill tipping fees can be significant.
The 25% allowance in the property policy is usually adequate for partial losses. In the event of a total loss, the situation is entirely different. The $10,000 or so additional limit for debris removal can leave you with an enormous bill to pay on your own.
There are times when the 25% allowance is inadequate as well. For example, a building in a downtown urban areas: demolition may be pushed into nighttime or weekend work schedules and heavy traffic and proximity to other buildings may materially increase the cost. Urban demolition and debris removal can cost over 40% of the damage. This can quickly become a six- or seven-figure sum that is uninsured.
The cost to increase debris removal coverage is not very expensive. Depending upon your selected limit it may cost you anywhere from an extra $50 a year to a few hundred dollars.
Also, like with any other coverage, all policies, limits, and coverages are different. So take some time to evaluate your policy to determine if it is correct for you. If you have any questions about this coverage, please don’t hesitate to contact our office.