Ordinance or law coverage

Ordinance or law coverage helps you upgrade your home or building methods when you're required by law or ordinance to to meet current codes after a loss.

a two-story craftsman home with ladders leaning against it

What is ordinance or law coverage?

Ordinance or law coverage provides additional protection after a loss. If you’re required by local ordinance or state law to upgrade your property to meet current building codes when repairing or rebuilding after a loss, this coverage helps you with the additional costs. 

For examples, new building codes may mean you have to upgrade your home’s:

  • Construction.

  • Electrical systems.

  • Plumbing.

  • Fire safety features.

  • Roofing methods.

It’s a scary thought but a real possibility – if you suffer a loss because of a covered peril, local ordinances may increase your repair costs by a staggering 50%. That would have a significant impact on your out of pocket expenses. 

Law or ordinance coverage is designed to protect you from these increased costs and is valid whether you suffer a partial or total loss to your home or other structures.

Most standard homeowners insurance policies include a clause that states that the insurer won’t cover costs associated with the enforcement of any law or ordinance that regulates the use, construction, repair and demolition (including removal of debris) of the property after an insured event has occurred. Getting ordinance and law coverage modifies your coverage so you’re protected from the extra cost.

When does ordinance or law coverage apply?

You can typically use this coverage when any law or ordinance requires you to:

  • Demolish, construct, remodel, renovate, or repair any part of your home or other structure on your property that’s been damaged by a covered peril.

  • Demolish or reconstruct an undamaged portion of your home or other structure because of covered damage.

  • Remodel, remove, or replace an undamaged portion of your home or other structure in order to fix the damaged portions of your property.

Essentially, ordinance or law coverage can help you with the additional cost that may come if you’re required to rebuild or repair your home to a stricter code after a covered loss. However, this coverage often excludes the cost of cleaning up, responding to, or measuring the effects of pollutants. 

When deciding if this coverage is necessary for you, you want to consider the age of your home. Older homes are more susceptible to building code upgrades after a covered loss. If you suspect your home was built according to out-of-date building requirements, we highly recommend that you purchase ordinance or law coverage. Depending on which state you live in, you may be able to select ordinance or law coverage limits based on certain percentages of the insured value for your dwelling.

If you are unsure as to whether you need ordinance or law coverage, you may want to get advice from a builder or home inspector. Either may be able to help you decide if you’re adequately protected from significant financial loss should you be faced with such a scenario.

When do I need ordinance or law coverage?

If you live in an older home or one that’s in an expensive area, you may want to check if your homeowner policy includes ordinance or law coverage. If it doesn’t, then you may need an ordinance or law endorsement). 

The same is true if you live in an older property that has recently been redeveloped or renovated, such as many formerly industrial properties in or near major city centers. The same holds true for homes in areas prone to natural disasters like hurricanes. 

In states like Florida, local codes are ever-evolving in response to climate change and its impacts on storm patterns and severity. Recent landslides in Utah have highlighted the potential need for updating local building codes in states prone to seismic activity as well, which could make ordinance or law coverage all-the-more meaningful for residents of western states.

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