Ordinance or law coverage is an important but often overlooked part of homeowners insurance. This additional protection covers extra costs that may be required to repair or rebuild your home after a covered loss to bring it up to current building codes and ordinances.
In this article, we’ll explain what ordinance or law coverage is, why it’s important to have, provide examples of when it would apply, and how to obtain it as part of your homeowner’s insurance policy. Understanding ordinance or law coverage can help ensure you have adequate protection for your most valuable asset.
What is Ordinance or Law Coverage?
Definition and Purpose
Ordinance or law coverage, also sometimes called building code upgrade coverage, is an endorsement that can be added to a homeowners insurance policy. It covers additional expenses that may be incurred if you need to rebuild or repair your home to meet current building codes and zoning laws after a covered loss.
The purpose of the ordinance or law coverage is to pay for any extra costs that would be required to make the repairs or rebuilding compliant with the most up-to-date ordinances and regulations. Building codes and zoning laws often change over time, so newer requirements may impact repair costs after a major loss.
Coverage for Bringing Your Home Up to Code
If your home is damaged in a covered loss, ordinance or law coverage will pay to bring the damaged sections up to code as part of the rebuilding process. This can include upgrades to electrical, heating, cooling, or plumbing systems. It ensures that any repaired or replaced components comply with current codes.
For example, if you have outdated electrical wiring that is damaged in a fire, the cost to repair it would be covered under your standard homeowner’s policy. But ordinance or law coverage would pay the additional cost to upgrade the wiring to meet modern code requirements.
The Importance of Ordinance or Law Coverage
Protecting Against Additional Expenses
One major benefit of the ordinance or law coverage is protecting against potentially huge extra expenses that come with rebuilding to meet new codes. The costs to demolish, remove debris, design plans, obtain permits, and complete renovations add up quickly. This coverage gives you the security of knowing these costs will be covered.
Without it, you could be faced with thousands in unexpected costs at a time when you’re already dealing with the disruption and financial stress of rebuilding your home after a loss. Ordinance or law coverage is critical to avoiding large out-of-pocket expenses.
Ensuring Compliance with Building Codes
Ordinance or law coverage also gives you the peace of mind of knowing any repairs or reconstruction will be compliant with the latest codes and standards. Your insurance company typically manages the process, ensuring the construction meets all requirements so you don’t have to worry about violations.
Having the right coverage ensures you won’t have to pay fines for non-compliance or be forced to make additional upgrades at your own expense. It provides complete protection to rebuild according to regulation.
Examples of Ordinance or Law Coverage
Here are some common examples of how ordinance or law coverage would apply in the event of a covered loss:
Repairing or Rebuilding After a Covered Loss
If your home is substantially damaged in a fire and needs to be reconstructed, an ordinance or law will pay for the costs to demolish and clear the site, obtain permits, design plans, and rebuild with upgraded electrical, plumbing, and construction materials that meet current codes. This can prevent thousands in extra costs.
Upgrading Electrical or Plumbing Systems
Say wiring or pipes are damaged in a kitchen fire. When repairing or replacing that section, an ordinance or law will cover the costs to bring the entire electrical or plumbing system up to code. This ensures full compliance.
Demolition and Rebuilding
If a covered event like a hurricane or tornado made your home uninhabitable and rebuilding was required, an ordinance or law would cover the costs for demolition and debris removal that exceed your policy limits. It would also pay for any code upgrades required during reconstruction.
Increased Construction Costs
Building costs often increase over time due to code changes and material prices. Ordinance or law coverage pays the difference so you can fully repair or rebuild even if construction costs are higher than when your home was originally built.
Upgrades to Meet Building Codes
If a portion of your home has outdated or grandfathered electrical, plumbing, or construction that no longer meets code, ordinance, or law will pay for required upgrades during rebuilding after a loss. This ensures full compliance.
How to Obtain Ordinance or Law Coverage?
If you want to add ordinance or law coverage to protect against the extra costs of repairing or rebuilding to meet current building codes, here are some key steps:
Adding it as an Endorsement to Your Homeowners Insurance Policy
In most cases, an ordinance or law is added as an endorsement or rider to your homeowner’s policy for an additional premium cost. Your insurance agent can explain available options and pricing.
Considering Coverage Limits and Costs
Typical ordinances or law coverage limits are 10-25% of the dwelling coverage amount in your policy. Higher limits are available at an increased cost. Consult your agent to determine ideal limits based on rebuilding costs in your area.
Consulting With Your Insurance Provider
Your insurance company or agent can explain specifics like any exclusions, limitations, and costs. They can advise on recommended coverage to fully protect your home within your budget.
Ordinance or law coverage provides invaluable protection against the significant expense of bringing your damaged home up to the current code. Understanding this important homeowners insurance coverage will give you financial peace of mind.
