Ordinance or Law

Ordinance or law coverage, sometimes called building ordinance coverage, pays for the additional cost of rebuilding a structure to current building codes when those required upgrades go beyond what the base policy would otherwise fund. Building codes change over time. Older homes often have wiring, plumbing, roofing systems, or structural elements that were fully legal when built but no longer meet today's standards. When a covered partial loss triggers repairs that require code-compliant reconstruction, the extra cost is ordinance or law territory.

There are three components to a complete ordinance or law endorsement. The first pays for the cost of demolishing the undamaged portion of a structure that cannot be rebuilt without violating current code (for example, a damaged wing that forces reconstruction of the entire floor plan to meet new setback requirements). The second pays the actual demolition cost for the undamaged section. The third -- and most commonly needed -- pays the increased cost of constructing the repaired or rebuilt sections to current code rather than simply restoring them to pre-loss condition.

Without this endorsement, your base policy pays to restore the damaged portion of your home to its pre-loss condition, no more. A 1975 home that suffers a kitchen fire may require updated electrical circuits, GFCI outlets, code-compliant HVAC venting throughout any affected area, and modern insulation in any opened walls -- all mandated by current building code, none of which was part of the original structure. That gap between restoring the old structure and meeting new code can range from $15,000 to $75,000 or more on older homes. For any home built before 1990, ordinance or law coverage is one of the most important and most commonly overlooked endorsements available.