Wow! You didn't see that one coming. You just reviewed your commercial building policy at renewal and you were sure that the building limit was high enough to cover it even if the the whole thing burned to the ground. Why am I spending $30,000 out of my pocket to get the damage fixed from this relatively small fire? The planning department says I need to do some code upgrades. What's the problem?
The issue is that your policy covers the damaged part of the building. It might even cover the undamaged part of the building when the planning department requires the code upgrade...that is, to get the building repaired back the way it was. But, unless you have coverage added to the policy to do the demoltion and debris hauling to the undamaged part, and pay for the labor and materials to replace the non-compliant code issue, you are not covered. This happens too often.
Example, a small fire damages a kitchen area of one unit of your six unit apartment building. You have plenty of coverage to make the repairs to get it back to the way it was before the fire. The building department wants the electrical brought up to code in the entire building. Your policy will likely cover replacing the sheetrock, the texturing, and paint when it is time to get it back together. But without the extra coverage for code upgrade, you have to pay to have the walls ripped apart, the old electrical wire, sockets, switches, and fuse/breaker box removed and hauled away. And then you have to buy the replacement materials and pay to have it installed.
Insurance companies handle this differently. It is all in the policy lannguage. Just a couple of words difference from one policy to another can cause you a lot of grief and expense. Maybe I should give you a second opinion!