Debris removal and demolition costs
An additional cover paying the cost of demolishing what remains of a damaged building and removing debris before rebuilding, often underestimated and capped as a percentage of the loss.
After a fire, explosion or storm, rebuilding first requires demolishing unstable parts, removing debris and cleaning the site. These operations have their own cost, which adds to rebuilding and which the main indemnity, calculated on the property's value, does not cover. Debris removal and demolition cover pays for them, usually within a limit expressed as a percentage of the indemnity or a fixed amount. Its importance is often underestimated at underwriting. Debris from an industrial site may contain asbestos, chemicals or contaminated ash, whose removal follows strict rules and sometimes costs as much as rebuilding. After a catastrophe hitting a whole region, demand for specialist firms sends prices soaring. And authorities may impose immediate safety works. The cover differs from increased cost of construction, which concerns rebuilding to new standards, and from soil remediation cover, which often belongs to environmental impairment insurance. For the insured, its limit must be sized on the site's worst-case scenario, not on an average.
A 1970 warehouse is destroyed by fire; building damage is valued at 6 million euros. The debris containing asbestos, its removal costs 1.4 million, while the policy caps debris removal at 10 percent of the indemnity, or 600,000 euros: the insured bears 800,000 euros for not having raised the cap.
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