Ordinance or Law Coverage

Example

“After the fire damaged their 1960s home, the Johnsons were grateful for their ordinance or law coverage, which paid for the additional $30,000 needed to install sprinkler systems required by current building codes.”

Memory Tip

Remember 'Old house, new rules' - older buildings often need expensive upgrades to meet current ordinances when rebuilt after damage.

Why It Matters

Without this coverage, property owners can face enormous unexpected costs when rebuilding after a loss, as current building codes are often much stricter than when older buildings were originally constructed. This coverage protects homeowners from potentially bankrupting reconstruction expenses that standard policies don't cover.

Common Misconception

Many homeowners believe their standard homeowner's policy will cover all reconstruction costs, but basic policies typically only pay to rebuild using materials and methods similar to the original construction. Ordinance or law coverage is usually optional and must be specifically purchased to cover the additional costs of meeting current building standards.

In Practice

Maria's 1970s home suffered $200,000 in fire damage. Her standard policy covered rebuilding costs using original materials and methods. However, current building codes required new electrical systems ($15,000), updated plumbing ($12,000), fire-resistant materials ($8,000), and ADA-compliant features ($5,000). Her ordinance or law coverage paid the additional $40,000, while without it, she would have faced these costs out-of-pocket or been unable to legally rebuild.

Etymology

From Latin 'ordinare' (to arrange in order) and Old English 'lagu' (law), referring to municipal regulations that govern construction standards and building requirements.

Common Misspellings

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See Also