One of the foundational tenets of insurance is that whatever is damaged will be returned to its previous state. When it comes to your home, restoration after damages takes on a new urgency. But what happens when a law or ordinance requires additional work in order to restore your home? Without ordinance/law coverage you would be required to pay the difference out of pocket. Law or ordinance coverage accounts for changes in a property’s building code when repairs are needed due to an incident.
Paying more for repairs often comes into play with an older home. Let’s say your 1960’s built home is damaged in a fire. Your insurance dictates that the repairs should bring the home back to its original state which is designed using 1960’s building codes. We know that building codes change regularly though so you will not be able to pass the required permitting process to complete the repairs until you bring the building up to current code. Ordinance/law coverage provides the additional funds to bring your house up to code.
What about newer homes though? There is a good chance that the building codes have not changed significantly, so you may want to lower your premium by removing ordinance/law coverage. However many states have a building code that says if 25% or more of a roof is damaged then the whole roof needs to be replaced. If 40% of your roof is damaged then technically the insurance company is only required to repair that 40%; after all, their job is only to bring the roof back to its previous condition. With ordinance/law coverage, the insurance carrier would pay to replace the entire roof since the building code requires a complete replacement.
It is important to note that not all home insurance policies come with this important coverage standard. Make sure to communicate with your agent to verify that your quote or policy includes ordinance/law coverage (sometimes abbreviated O/L coverage).