Ordinance or Law Coverage- Every Building Should Have Coverage

2/19/2019 (Permalink)

Ordinance Or Law Coverage allows for payment of losses arising out of the enforcement of building laws or ordinances, including those that may require the demolition of damaged structures that increase the cost of repairing or rebuilding the damaged property.  According to Adjusters International Disaster Recovery Consulting, compliance with ordinances and laws after a loss can add 50% or more to the cost of the claim. 

Building codes or ordinances set minimum standards that must be met when structures are built or reconstructed. Their purpose is to protect the health and safety of building occupants. Building codes may be enacted and enforced by state and/or local governments.  Building codes are primarily directed at new construction. Yet, they may also apply when existing structures are renovated, altered, reconstructed or used in a different way. 

Some codes may require a building that is only partially damaged to be demolished and reconstructed rather than repaired. A building may require demolition and reconstruction if the damaged portion is worth 50% or more of the building's value. Codes can affect the size, design, height, usage and location of a structure. They may also determine the building materials that may be used.

Building codes change frequently. Codes that existed when a structure was built may be outdated when a loss occurs. To meet current codes, a damaged building undergoing repair may require expensive materials. Some structures may need to be reconfigured. Thus, building codes can significantly increase the cost of the repairs or renovations.

Homeowners policies often include a standard amount of ordinance or law coverage which is 10% of the dwelling coverage or coverage A.  This may be enough for newer or updated homes but careful review of possible building code issues should be made in order to determine if more coverage makes sense.  In commercial insurance, ordinance or law coverage is not typically included and can be added with an endorsement.  It is important to take a comprehensive look at the building and potential ordinance or law costs that may be incurred in order to determine how much coverage should be added. 

Consult your insurance agent for more information so you won’t get burned if you have a disaster.