Home Insurance Quote | In recent posts, we've talked about how to make sure you have the right coverage to protect your home. There is another element of homeowners insurance that is essential to ensure you have all the coverage you need - and not having it could leave you unexpectedly out of pocket for thousands and thousands of dollars in the event of a covered loss.
That coverage is known as ordinance or law and it can be a key component in having enough insurance should major damage ever affect your home. The coverage works in any of three ways: to cover the costs of bringing your house up to code after a loss; to help with the extra cost of demolition, and to rebuild those parts of your house that were not damaged by the loss but must be brought up to code as required by the local building department. Building departments may not issue a permit to repair the covered damage until all areas not to code are addressed.
Why do you need it? You've done your homework, insured adequately to rebuild your house in the event of a loss, and you feel confident in your coverage. That's terrific. But your homeowners policy is designed to cover the costs of repairing or replacing damaged parts of your home to their pre-loss condition. Things like meeting new building codes requiring anything from hard wired smoke detectors to rewiring the entire electrical system to, hurricane-resistant roofs or windows or the cost of rebuilding your entire home when only part of it was damaged - may pose extra expense not covered by your policy.
The bottom line: Ordinance or law coverage is triggered when, after a covered loss, you are required to comply with a law, ordinance, statute or building code, and additional costs, separate to the actual damage from the loss, are incurred. Without it, you face those costs on your own.
Local authorities frequently revise building codes, seeking to incorporate the most up-to-date construction and safety techniques to properties in their communities. Even if your house is just 10 years old, chances are very good it is not up to code in at least a few areas. As your house is repaired after an insured event, building authorities may require it be brought up to code before issuing a permit for repair. Ordinance or law coverage covers costs associated with this consequential loss. Building codes vary, and shortfalls associated with ordinance or law compliance can come from any number of circumstances. Some building departments require the total demolition of a property that sustains 50% or more damage. In this event, ordinance or law coverage will respond to the additional costs incurred over and above the costs to repair the actual damage from the original covered loss.
FILLING THE GAP
Without adequate ordinance or law coverage, you would be responsible for the cost of demolishing the rest of the structure, the removal of that debris, and for the cost to rebuild the undamaged portion of the house. You can easily imagine those kinds of costs running into the tens of thousands, or even more. Ordinance or law coverage is designed to help fill that gap.
Ordinance or law coverage can come into play on smaller damages as well. A storm may damage a portion of your roof, which would be covered by your Florida homeowners policy after your deductible. But building regulations in your area might require that the entire roof be retrofitted with tie-downs or even replaced to meet new hurricane resistance standards. These upgrades, even though they are required by law, are regarded as home improvements by your home insurance and are not covered. Without ordinance or law coverage, you will pay the difference out of your pocket. Ordinance or law coverage will fill the gap, helping you to bring your house up to code.
For instance, if the first floor of your home was damaged from a plumbing loss, and, in the course of repairs, the contractor finds your electrical system is outdated the building inspector may require the entire electrical system throughout your house be upgraded to code. Your Florida homeowners policy will pay for the repairs from the water damage but does not cover the update of the electrical system, because that is considered an improvement to the house and unrelated to the actual water loss. Without ordinance or law coverage, you would be paying for that updated electrical system out of pocket.
Other code improvements you might face could include updates to your heating, cooling and ventilation systems, to your home's plumbing, or even your foundation.
These issues are important for all homeowners, but especially for those with older homes that may not comply with current building codes. Your American Integrity Insurance homeowners policy includes law and ordinance coverage at 10 percent of the limit on your primary dwelling. That means if your home is insured for $100,000, you would have $10,000 in ordinance or law coverage to pay for improvements to meet code following a covered loss. That very basic coverage can offer a level of comfort for homeowners. For an older house you may want extra piece of mind by opting to increase that coverage to 25 percent or 50 percent. Work with your insurance agent to make sure you have enough ordinance or law coverage to meet unexpected costs