Ordinance Or Law Coverage Endorsement in Insurance

What Is Ordinance Or Law Coverage?

Ordinance or law coverage is an insurance endorsement that helps pay for the increased costs of repairing or rebuilding a property in compliance with current building codes, zoning laws, or safety ordinances. It’s especially important for landlords who own older rental properties that may not meet today’s construction standards.

When a property is damaged—whether by fire, storm, or another covered peril—standard insurance typically only pays to return it to its previous condition. But if local laws require upgrades to electrical systems, structural elements, or fire safety features during the rebuild, the extra costs may not be covered without this endorsement.

There are generally three parts to building ordinance or law coverage:

1. Coverage A – Undamaged Portion: Pays to demolish and remove undamaged parts of the structure if the entire building must be brought up to code.
2. Coverage B – Demolition Costs: Covers the cost of tearing down damaged parts of the property as required by law.
3. Coverage C – Increased Cost of Construction: Pays for code-mandated upgrades, such as installing sprinkler systems, energy-efficient materials, or reinforced roofing.
   

For landlords, this can be particularly relevant after a fire or natural disaster, where rebuilding must meet new codes—often at a significantly higher price. Learn more about how these scenarios are handled in fire damage landlord insurance and how specific storm and hail damage coverage may intersect with local ordinance requirements.

Without this endorsement, you could be left covering thousands in out-of-pocket expenses just to bring your property up to code.