A tropical storm sweeps through your town in a swirl of debris, shattering a few of your home’s windows. You file a claim with your homeowners insurance company, expecting it to pay for new windows. But when it’s time to do the work, you discover that the latest building codes in your area require hurricane shutters or impact-resistant glass on all windows — neither of which you had.
Your homeowners policy will pay enough to replace your windows with similar ones to what you had. However, it won’t cover the additional cost of upgrading the glass or buying shutters.
In a scenario like this, ordinance or law coverage can come in handy.
What is ordinance or law coverage?
Ordinance or law coverage is insurance that pays to bring your home in line with current building codes after a covered claim.
A homeowners policy is designed to help you restore your home to its condition before the damage, not to make improvements. So if the latest building codes require upgraded wiring or more wind-resistant roofing than you had, your policy’s dwelling coverage generally won’t pay for those extras. Ordinance or law coverage could fill the gap.
Did you know…
Dwelling coverage is the part of a homeowners insurance policy that pays for repairs to the structure of your home.
Your homeowners insurance policy may include a small amount of ordinance or law coverage, but you can often buy more as an add-on to your policy.
What does ordinance or law insurance cover?
Ordinance or law coverage pays for three main categories of expenses that local building codes could trigger.
Updating a damaged part of your home
As noted above, ordinance or law coverage can pay for unexpected upgrades while you’re repairing a damaged part of your house.
Example: Dinner goes very, very wrong one night, and your kitchen catches fire. Among other things, the pipes to the kitchen sink are damaged, and a contractor tells you that your plumbing is years out of date. Ordinance or law coverage could pay for the necessary updates, up to your policy limit.
Rebuilding or updating an undamaged part of your home
In some cases, building code updates might require you to make changes to parts of your house that didn’t suffer damage. Ordinance or law coverage can help with this, too.
Example: Imagine that a more severe fire spreads through multiple rooms before firefighters get it under control. In some parts of the U.S., a house that’s more than 50% damaged has to be torn down instead of being repaired. But your homeowners policy will typically pay to rebuild only the part of your home that was damaged. Without ordinance or law coverage, you’d have to pay for the rest of the rebuild yourself.
Here’s another example. Say you file a claim for water damage after a burst pipe. Your home has outdated knob-and-tube wiring that needs to be replaced — in the room where the pipe burst and throughout the house. A standard homeowners policy likely wouldn’t pay for wiring in the undamaged part of your house, but ordinance or law coverage would.
If a covered disaster destroys your house, a homeowners policy may pay to remove the debris so you can rebuild. But say your home is only partly damaged and local law requires you to tear down the rest of it. In that case, you may need ordinance or law coverage to pay the full cost of demolition and debris removal.
Do you need ordinance or law coverage?
Building codes and other local regulations change regularly, so having ordinance or law coverage is worth considering for every homeowner.
Check your homeowners policy or call your agent to see whether you already have some coverage. For example, you may have ordinance or law insurance up to 10% of your dwelling coverage limit. So if the structure of your home is insured up to $250,000, you’d have $25,000 to put toward compliance with local codes and laws.
However, the older your home is, the higher you may want this limit to be. Has it been a few decades since you updated your wiring, plumbing or heating and cooling systems? If so, your home could be significantly out of step with current regulations. If something goes wrong, you might be grateful for a generous ordinance or law limit to make required changes.