What is Ordinance or Law Coverage?
Ordinance or Law coverage is a specific provision in many homeowners insurance policies designed to help cover the additional costs of repairing or replacing your home to meet current building codes. When local building regulations change, older homes may require expensive upgrades during a repair project.
Definition
What Ordinance/Law means
In property insurance, Ordinance or Law coverage helps pay for the increased construction costs required to comply with updated building codes or local ordinances after a covered loss. Standard policies typically cover the cost to restore the property to its previous state, but without this specific coverage, homeowners might have to pay out of pocket for mandatory code upgrades.
Example
Hypothetical Roof Code Upgrade Scenario
A homeowner needs a roof replacement after severe wind damage. The local building authority now requires a specialized ice and water shield that was not present on the original roof. The standard replacement cost is $10,000, but the mandatory code upgrade adds $2,000 to the total cost.
Standard Replacement Cost: $10,000. Mandatory Code Upgrade Cost: $2,000. Total Cost: $12,000. If the policy includes Ordinance or Law coverage with a sufficient limit, it may cover the additional $2,000, minus the homeowner's deductible.
Without Ordinance or Law coverage, the homeowner might be responsible for the $2,000 code upgrade out of pocket. Always review your policy limits and consult your licensed insurance agent to understand your specific coverage.
Ordinance or Law Coverage vs Standard RCV
Ordinance or Law Coverage vs. Standard Replacement Cost Value (RCV)
Primary Purpose
Helps pay for the increased costs required to meet new, mandatory local building codes.
Helps pay to repair or replace the property with comparable material and quality.
Scope of Work
Applies specifically to required upgrades that were not part of the original structure.
Applies to restoring the home to its exact condition before the covered damage occurred.
Policy Limits
Usually offered as a percentage of the dwelling limit, such as 10% or 25% of Coverage A.
Typically based on the overall dwelling coverage limit (Coverage A) chosen by the homeowner.
Out-of-Pocket Impact
Reduces the risk of paying out of pocket for expensive, legally required construction upgrades.
May leave homeowners paying out of pocket if local laws require upgrades not covered by standard RCV.
Why Building Codes Matter for Your Roof
Building codes are local regulations that dictate how structures must be built or repaired to ensure safety and energy efficiency. Over time, municipalities update these codes to reflect new construction standards. For roofs, this might mean requiring specific types of decking, enhanced ventilation systems, or secondary water barriers. When a roof needs to be replaced, contractors must pull permits and follow the current codes, regardless of how the original roof was built.
How Ordinance or Law Coverage Works
Standard homeowners insurance policies generally cover the cost to repair or replace damaged property with materials of similar kind and quality. However, they often exclude the extra costs associated with bringing a building up to current code. Ordinance or Law coverage is designed to bridge this gap. If your policy includes this provision, it can help cover the mandatory upgrades required by local authorities, subject to your specific policy limits, deductibles, and documentation requirements like estimates and invoices.
Checking Your Policy Limits
Ordinance or Law coverage is not always included by default, and when it is, it usually has a specific limit. This limit is often calculated as a percentage of your total dwelling coverage, such as 10% or 20%. It is important to review your policy declarations page or speak with your licensed insurance agent to understand exactly what is included. Knowing your limits helps you prepare for potential out-of-pocket costs if your roof requires extensive code upgrades.
Homeowner FAQ
Ordinance/Law questions, answered carefully
Is Ordinance or Law coverage included in every homeowners policy?
No, it is not always included by default. Some policies include a base percentage, while others require you to add it as an endorsement. You should review your policy language or ask your insurance carrier to confirm your coverage.
What types of roof upgrades might building codes require?
Common roof code upgrades include adding ice and water shields, upgrading roof decking, improving attic ventilation, or using specific types of underlayment to meet modern wind mitigation standards.
Does Ordinance or Law coverage pay my deductible?
No. You are still responsible for paying your policy deductible. Ordinance or Law coverage only applies to the additional costs of code compliance after your deductible has been met, subject to your policy limits.
How do I prove that a code upgrade is required?
Your roofing contractor typically provides documentation, such as local building code ordinances, permits, and detailed estimates or invoices. Your insurer will review this documentation to determine if the upgrades meet the criteria for your Ordinance or Law coverage.
Educational note
The information provided is for educational purposes only and does not constitute legal, financial, or insurance advice. Alderwise is a roof inspection request platform. We do not make coverage decisions. Policy terms, conditions, limits, and deductibles vary by insurer and state. Always consult your insurance carrier or a licensed insurance agent regarding your specific policy.
Go deeper on roof age and policy language
For broader homeowner context, read the Alderwise guide to roof age, ACV and RCV terms, and inspection documentation before reviewing policy-specific questions with a licensed insurance agent or carrier.
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