How does Ordinance or Law Coverage work?

Within your home insnurance policy is a little know coverage called Ordinance or Law coverage. This super important coverage is the coverage necessary to bring your home up to code after a covered claim event. It also provides coverage for cost overruns due to a municipality’s ordinances or laws.

Many times building codes will have a provision that says that if a particular system is a more than a certain percent damage that it has to be completely replaced. The insurance policy says that the insurance company will pay to repair damage items. What could happen here is that the home reimburses for the damage but the law requires full replacement leaving the homeowner with a huge out of pocket expense to cover the gap.

Ordinance or Law coverage typically would kick in in such a scenario to fill this gap. This coverage is typically disclosed as a percent of your dwelling coverage and is additional insurance above and beyond your dwelling coverage.