Property claims glossary
What is ordinance and law coverage?
Ordinance or law coverage pays the extra cost of repairing or rebuilding to meet current building codes, which the base dwelling coverage otherwise limits or excludes. It matters because code upgrades can add a lot to a repair, and the coverage has its own limit, often a percentage of the dwelling limit.
Worked example · fictitious claim
Wind damages a roof, and the like-for-like repair costs $20,000. Local code now requires new decking and underlayment that add $6,000. With ordinance or law coverage of 10% of a $300,000 dwelling limit, up to $30,000 is available, so the full $6,000 is covered and the total is $20,000 + $6,000 = $26,000 before the deductible.
How it affects a settlement
Ordinance or law costs are paid from their own limit, separate from the cost to repair what was there, and many policies pay them only once the work is actually done. Missing the coverage underpays the family; paying code upgrades beyond the limit overpays the claim.
In practice
Coverage for the extra cost of rebuilding to current building codes rather than to the property's original construction. Many homeowners forms include a limited amount, often a percentage of the dwelling limit, and an endorsement can raise it; either way it carries its own sub-limit. Frequently missed in both directions: not applied when owed, or paid beyond what the policy grants.
Related
Endorsement · Replacement cost value (RCV) · Policy coverage checking · property claims glossary