What does ordinance or law coverage do?
Ordinance or law coverage pays the extra cost of rebuilding to current building codes after a covered loss. Standard homeowners policies pay to restore what was damaged. They do not pay for code-mandated upgrades required by local authorities before a rebuild permit will issue.
Why do Georgia homeowners need ordinance or law coverage?
Codes change. A house built in the 1970s or 1980s may predate requirements for arc-fault circuit interrupters, hurricane or seismic straps, modern plumbing materials, or insulation minimums. After a covered loss, the local building department will not issue a permit to rebuild the old way. The cost of code compliance falls on the homeowner unless ordinance or law coverage is in place. Georgia has significant pre-2000 construction across Metro Atlanta and surrounding counties, which means this exposure is widespread.
What are the three components of ordinance or law coverage?
The coverage addresses three separate costs:
- Increased cost of construction: the added expense to bring the damaged portion up to current code during the rebuild.
- Demolition costs: the cost to tear down undamaged sections of the structure that code requires to be removed before reconstruction can proceed.
- Loss to the undamaged portion: the value of the part of the building that must come down, even though the original loss never touched it.
Without all three components, a large share of the real rebuild cost sits outside the policy.
How does ordinance or law coverage apply in a real Georgia claim?
For example, a 1978 home in Marietta sustains fire damage to 40 percent of the structure. The county requires the remaining undamaged 60 percent to be demolished and rebuilt to current electrical and framing standards before a permit issues. The base homeowners policy pays to replace the fire-damaged section. Demolition of the undamaged wing, plus the code-compliant rebuild of that wing, falls outside the standard policy. Those costs can run $30,000 to $80,000 on an older home, sometimes more in markets where labor and materials are tight.
For example, a Cherokee County homeowner rebuilding after a hail and wind event found that current energy-code requirements for wall insulation and window ratings added roughly $18,000 to the reconstruction cost above what a standard replacement-cost estimate had projected.
What does a standard homeowners policy cover for ordinance or law costs?
Most standard homeowners policies either exclude ordinance or law costs entirely or carry a sub-limit of 10 percent of the dwelling coverage limit. On a $400,000 dwelling, that is $40,000 of ordinance or law protection. For a home more than 20 to 30 years old in a Georgia county with updated codes, $40,000 may not cover the full exposure. The declarations page and any attached endorsements show what your current policy provides.
How do I know if my ordinance or law sublimit is adequate?
A licensed advisor can read your declarations page and the policy endorsements and confirm exactly where your ordinance or law sublimit sits and whether it is adequate for the age and size of your home. Homes more than 20 years old in Metro Atlanta and the surrounding counties face the highest exposure, given how much local code has changed since they were built. A free coverage review through Olive Cover is the direct path to that answer.