Ordinance and law coverage is a type of insurance coverage that is included in most homeowners policies. This coverage helps protect homeowners against the cost of complying with local building codes and ordinances when repairing or rebuilding their home after it has been damaged or destroyed.
Here’s how ordinance and law coverage works:
Imagine that your home is severely damaged in a natural disaster, and you need to rebuild it. As you begin the rebuilding process, you discover that building codes and ordinances have changed since your home was originally built. These changes might require you to use different building materials or follow different construction standards.
Common examples of new codes you’ll need to comply with:
- 2×6 exterior framing instead of 2×4
- Greater R-Values (more insulation)
- Low flow or water conserving toilets
- Thicker footers and foundation walls
- Stricter fire prevention codes
- Increased electrical capacity
If you don’t comply with these new codes you may not pass inspection. This could mean you can’t get an occupancy permit for your home. In addition, you might have to pay out of pocket to make any necessary changes to your home in order to bring it up to code.
This is where ordinance and law coverage comes in. If you have this coverage in your homeowners policy, it will pay for the extra costs you incur to bring your home up to code when rebuilding it after a covered loss. This can help protect you against unexpected expenses and ensure that you are able to rebuild your home to current construction standards.
How much coverage do you need?
It’s important to note that ordinance and law coverage is typically limited to a percentage of the total value of your home. For example, your policy might cover up to 10% of the value of your home for ordinance and law expenses. So, if your home is worth $200,000, your policy would cover up to $20,000 in ordinance and law expenses.
How much coverage you need will vary wildly depending on the age of your home, how much local codes have changed, and changes that you’ve kept up with throughout the year. It’s strongly recommended to increase the coverage from the amount provided on the base policy though.
Ordinance and Law Insurance Coverage for Homeowners
In summary, ordinance and law coverage is an important part of a homeowners policy that can help protect you against the cost of complying with local building codes and ordinances when rebuilding your home after a covered loss. Be sure to check how much coverage is included when you’re buying your homeowner’s insurance policy. Then ask your broker how much coverage is available to you.