It is possible that a building may no longer be rebuilt in the same way. This mainly occurs in old buildings, such as an old factory, a monastery or church building. The fork clause (‘single loss limit’) is a form of insurance that can then be used.
In the case of a fork clause, 2 fixed amounts are included in the report. These are the rebuild value (rebuild in the same location with the same materials) and the fork.
The fork is the amount needed to build a new building on the same location with the same function as the previous building. The premium is the average of the two determined amounts – the rebuild value and the range. This often provides an advantage for the person who pays the premium.
It is important with the fork clause that a maximum of the fork amount is paid out in the event of damage. Hence the term ‘single loss limit’. It can then happen that problems arise in case of partial damage, because the partial damage is higher than the fork. It is therefore very important that the advantage of the lower premium must be large enough to justify any risk of partial damage. In other words; the ‘profit’ that is built up with the lower premium must be large enough to serve as a buffer in the event of higher claims costs.
An office is housed in a beautiful, old church building. If the entire church building burns down in a fire, the office would also want an office in return for the same number of employees, including a reception hall, archive, toilets, canteen and meeting room. The appraiser then calculates what this new option should cost to build – that is the fork.
Please note: there is almost always an obligation to repair in the case of protected village views and monuments, etc. The fork is not an issue here, the old building must be restored.