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Rathbun Insurance Blog

All You Ever Wanted to Know About Insurance

Because You Never Know When Your City Will Pull A Surprise Code Change

Did you know that after experiencing a homeowners loss, rebuilding your home to meet current codes may cost more than the replacement cost on your policy? What happens when your city decides to pass a new ordinance, forcing you to make mandatory upgrades to your property? Having to comply with new ordinances can be stressful, not to mention extremely costly, without the proper coverage.

Ordinance or law coverage is an aspect of insurance that provides financial assistance if a building must be brought up to code. This can happen if an extreme incident damages a building, or if a city or state passes new legislature requiring mandatory upgrades in order to adhere to current codes.

New ordinances may require certain aspects of a building to be repaired or replaced, or they may require the entire building to be demolished and rebuilt from the ground up. 

Local codes vary depending on where you live, and they change all the time. Mandatory changes required by new ordinances range from simple and cheap to complex and costly.

Ordinance or law coverage may be necessary for the following:

  • New weatherproofing codes: In areas prone to windstorms, new ordinances may be passed that require upgrades to home features like storm windows/shutters or roofs. In areas prone to flooding, local ordinances may suddenly require homes to be demolished and rebuilt on elevated foundations such as stilts.
  • New fire safety codes: New local codes may dictate stricter fire safety measures. This might involve simply adding features like fire extinguishers, or something more complicated like installing sprinkler systems or fire escapes.
  • New handicapped compliance codes: New city legislation may require you to add handicapped- compliant features to your building such as ramps or lowered light switches.
  • New plumbing or wiring codes: Changes in local ordinances may require you to update or upgrade features in your home such as the wiring or plumbing systems for safety reasons.

Ordinance or law coverage typically takes care of the following:

  • The cost difference for upgraded features: A standard policy may not provide the funds to make up the difference in cost between the old feature being replaced and its upgraded counterpart. So if you’re required to install newer or fancier storm windows, standard policies will cover replacement costs equivalent to the value of your old windows, and you’ll have to pay the difference for the new ones. Ordinance or law coverage does this automatically.
  • The value of the undamaged portion of demolished buildings: Let’s say a bad fire causes damage to about 60% of a building, and now the whole thing needs to be demolished and rebuilt. Without ordinance or law coverage, the undamaged 40% of that building won’t be paid for. Ordinance or law coverage also pays for the cleanup of debris or other messes left by the undamaged portion.
  • The cost of bringing undamaged portions up to code: Partially damaged buildings that are required to be brought up to new codes are fully covered under ordinance or law coverage. Standard policies only provide coverage for the damaged portion.

Ordinance or law coverage is important to fill in the gaps left behind by standard policies lacking in full repair/replacement/upgrade protections. New local ordinances can be passed at any time, so having full coverage is worth it for  peace of mind.

If you are interested in adding this coverage to your homeowners policy, give us a call.