What is the coverage limit when an insured has to pay to put damaged property up to code?

The coverage limit relevant to the situation where an insured is required to pay for bringing damaged property up to code is typically structured as either a flat dollar amount or a percentage of the Coverage A limit. In this case, the correct choice indicates that the insured can receive coverage for either $10,000 or 5% of the Coverage A limit, whichever is greater.

This provision is crucial because it ensures that when a property incurs damage, the insured not only has coverage for replacement or repairs but also has additional funds to meet local building codes and ordinances that may have been updated since the property was initially built. This type of coverage can help in mitigating the financial impact of making necessary adjustments to damaged properties, which could potentially exceed the standard coverage amounts.

This option effectively combines the two tiers of calculation, providing flexibility depending on the total value of the Coverage A limit. The lower thresholds would generally be efficient for properties with lower Coverage A values while still providing a significant safety net for compliance with modern code requirements.