You have probably seen this on a quote or policy and either wondered what it was or just didn’t even care and rejected it (don’t feel bad, we’ve all ignored the terms and conditions before).
So, what is ordinance or law coverage and why would you ever want or need it?
According to IRMI.com, the definition of ordinance or law coverage is “coverage for loss caused by enforcement of ordinances or laws regulating construction and repair of damaged buildings.”
Aside from the jargon, what that means is that this coverage is there for you when you have a loss and are forced to upgrade your plumbing, HVAC, electrical, etc. due to city ordinances or codes that require it.
Say, for example, that your building/home was built in 1980 and the plumbing, electrical, and HVAC have not been updated. If your current carrier has been apprised of this and still covers your home and you have a loss, you will have to update the utilities when you rebuild because codes have changed quite a bit since then. In order to complete the claim and pay out, the insurance company will have to have proof that the job has been completed and everything is up to code. If they do not, they are not going to want to pay. However, without ordinance or law coverage, you will be on the hook for the upgrades required, which could end up being an extra several thousand dollars. If you have the extra coverage on your policy, that will be added into your claim and you will not be out that extra money!
It is also entirely possible that your insurance carrier will try to exclude this coverage, so it is up to both you and your agent to read through your policy extra carefully to make sure you will not end up in a tough spot in the event of a loss!
If you have any questions, or if you want to check in on your own policy, please give us a call!