Ordinance or law coverage
Ordinance or law coverage helps pay the extra cost of repairing, demolishing or rebuilding a home or building to meet current building, zoning or land-use rules after a covered loss. The endorsement or declarations page sets its limit, deductible and conditions. Without it, code-upgrade costs may be excluded.
Also called: ordinance or law, ordinance and law
When a fire or storm damages a house, the repair may have to meet today's building code rather than the code it was built under. Ordinance or law coverage pays that difference, up to its own limit: the wiring, structural work or demolition current rules require. It responds only to a covered loss and legally required work, within your policy's limit and wording.
How ordinance or law coverage pays on a claim
A 25% ordinance or law limit on a $200,000 dwelling limit comes to $50,000, the example used by the Florida Office of the Insurance Consumer Advocate (opens in a new tab). Add illustrative claim figures: $120,000 of covered fire damage, a $2,000 deductible, and $35,000 of electrical and structural work that current code requires.
Hover or tap a row to highlight it.
| Item | Amount |
|---|---|
| Dwelling coverage | $200,000 |
| Ordinance or law limit ($200,000 x 25%) | $50,000 |
| Covered fire damage | $120,000 |
| Minus deductible (illustrative) | $2,000 |
| Payment for the damage | $118,000 |
| Required code work, paid under ordinance or law | $35,000 |
| Total insurer payment | $153,000 |
| Ordinance or law limit left ($50,000 minus $35,000) | $15,000 |
Here you pay only the $2,000 deductible for the covered work, assuming the endorsement covers the required work, the costs are actually incurred, and no sublimit or exclusion applies. Without the coverage, the $35,000 would generally be yours if the base policy excludes code costs.
Limits, percentages and the three parts of the coverage
How the limit is set changes what is available at claim time.
- None. Some residential policies do not include building-code-upgrade coverage, according to the California Department of Insurance residential guide (opens in a new tab), so code costs may be excluded.
- 10% of the dwelling limit, included or optional, per a California Department of Insurance policy comparison (opens in a new tab).
- 25% or 50% by endorsement. One filed California program included 10% and charged 4% of base premium to raise it to 25%, or 6% to raise it to 50%, according to a California Department of Insurance filing memorandum (opens in a new tab). That is one insurer's program, not a national price.
- Inside or outside another limit. Some forms count the amount within the dwelling limit; others add a separate limit on top.
Commercial property forms usually split the coverage in three, according to the California Department of Insurance commercial guide (opens in a new tab): Coverage A for the value of an undamaged portion that must come down, Coverage B for demolishing and removing it, and Coverage C for increased repair or reconstruction costs. Some residential policies separate these too or add sublimits. The deductible may be the ordinary one or separate, and some policies pay only after the work is done and documented.
A higher limit can raise the premium and the amount available after a loss, but it does not raise the dwelling limit, remove the deductible or cover an excluded peril.
Where you'll find it in your policy
This is a property insurance term. It shows up in homeowners insurance (HO-2, HO-3 and HO-5 forms), condo unit-owner HO-6 policies, renters HO-4 policies, dwelling-fire and landlord policies, and commercial property and businessowners policies. Quotes may call it "law and ordinance," "building code upgrade" or "increased cost of construction." The declarations page may list it as its own limit or as a percentage, such as 10%, 25% or 50% of the dwelling coverage. It can also appear as an exclusion an endorsement restores, on a renewal notice when the limit changes, or in a claim estimate that mentions code upgrades or permits.
Your property interest matters. An HO-6 policy generally covers the unit's interior and improvements while the association's master policy covers the building, and a renter generally insures contents and liability, with any tenant improvements subject to the policy wording, according to the New York Department of Financial Services homeowners and tenants guide (opens in a new tab). It is separate from loss of use coverage, even when code work keeps you out of the home longer.
Connecticut and New York rules
Connecticut requires covered policies, other than a standard fire policy, to provide coverage for the increased cost of repair or reconstruction caused by ordinances or laws, up to the amount stated in the policy, under Conn. Gen. Stat. § 38a-308 (opens in a new tab). Since Public Act 18-105 took effect for policies issued or renewed after July 1, 2019, insurers must offer the coverage and document the offer, according to the Connecticut Insurance Department notice on Public Act 18-105 (opens in a new tab). If an insurer lowers the limit at renewal, it must send a conditional renewal notice explaining the reduction under Conn. Gen. Stat. § 38a-323 (opens in a new tab). The statute sets no single percentage, so your policy's limit controls; the Connecticut homeowners insurance guide has the state's other rules.
New York sets no statewide percentage for ordinary homeowners, condo or renters policies; N.Y. Ins. Law § 3404 (opens in a new tab) creates the standard fire policy and allows approved endorsements. During a pending property claim, the insurer must give you its written repair estimates within 30 days of your request or of preparing them, whichever is later, under N.Y. Ins. Law § 3407-A (opens in a new tab).
Questions to ask your agent or insurer
Keep the declarations page handy.
- Is ordinance or law coverage included, or do I need an endorsement? This decides whether code costs are covered at all.
- Is the limit a percentage of dwelling coverage, a separate added limit, or a sublimit inside another coverage? The answer changes the dollars available.
- Does it cover the undamaged portion, demolition and removal, and increased construction costs? A policy may cover one and limit another.
- Does it apply to my condo unit, tenant improvements or detached structures? Different policies insure different interests.
- What must I provide after a loss, and do I have to repair or rebuild by a deadline? Permits, code citations and invoices can decide whether the insurer pays.
Frequently asked questions
Short answers on code upgrades.
Does ordinance or law coverage pay for any code violation or upgrade?
No. It is tied to a covered loss and to work the law requires. An existing violation, deterioration or pre-loss maintenance problem may not qualify, and neither may upgrades a contractor merely suggests.
Does replacement cost coverage already pay for current code?
Not necessarily. Replacement cost pays to repair or replace with like kind and quality without depreciation, according to the NAIC (opens in a new tab), while ordinance or law covers the added compliance cost. They handle different parts of a claim.
Are other states different?
Yes. Florida requires regulated insurers to include at least 25% of the dwelling amount on homeowners policies and to offer 50%, though not in the same way for mobile-home, renters or condo-unit policies, according to the Florida Department of Financial Services homeowners toolkit (opens in a new tab).