Ordinance & Law coverage was developed to solve a fundamental problem with home insurance. The purpose of any insurance policy is to put you back into the same financial position you were in before a loss, no better and no worse. This can be a real problem if your house was build 25, 50 or 100 years ago. Every year, cities, counties, states and the U.S. government makes changes to building codes. Even a house that was build just five years ago, is probably no longer up to current new building codes.
If your house were to burn to the ground, or even suffer a partial loss, your local government will likely force you to rebuild to current building code standards. Since your insurance is not supposed to put you in a better position than you were in prior to the loss, your claim will be paid out based on how your house was before the claim. What happens if you’re no longer allowed to build your house to the way it was due to changes in building codes? Without ordinance and law coverage, you’d have to pay for all the building code upgrades.
Luckily, most home insurance policies come with some ordinance & law coverage. I find that most standard home policies will include 10% of your dwelling for ordinance and law. This means that if the insurance company is covering your house for $500,000, you’d have $50,000 in building code upgrades. Is 10% enough? Many of the the carriers we work with don’t cap ordinance and law outside of your dwelling coverage.
Ordinance & Law Common Examples
- Wind & Hail Claims – The addition of ice & water shields. Many municipalities in the Denver metro area now require ice & water shields on roofs. Most existing roofs don’t have ice & water shields.
- Wind & Hail Claim – many homes built before 1960 have slat decking under the shingles. Homes built in the past 60 years normally have plywood decking under the shingles. Slat decking is no longer code in many areas and needs to be replaced when a roof is replaced.
- Fire – building codes have required homes to become more and more energy efficient over the years. There are minimum R-Values required for insulation in attics, walls and floors. The higher the R Value, the more expensive the insulation. After a fire, or other covered claim, it may be required to upgrade the insulation in your house to a higher value.
- Fire & Hail – Many homes have single or double pane windows, however double or triple pane windows may now be a requirement. Without ordinance & law coverage, your insurance would only pay for the type of windows you had prior to the loss.
- Fire or Water – Electrical, plumbing and HVAC are some of the most common types of systems that have frequent code changes.
- Many many other code changes occur and can come into play with your home insurance.
Not sure about your ordinance and Law coverage? Give our office a call or text and we can help you find a company that fits your needs.