If something happens to your home, your homeowners policy helps restore it to its original condition, using the same materials. In the insurance world, that’s called “like kind and similar.”
What it doesn’t account for is when building codes require the rebuilt structure to meet a higher standard than what your home was originally built to.
Codes change over time, and the difference between what your policy covers and what code now requires is exactly what Ordinance or Law coverage is designed to handle.
Where the Gap Shows Up
Your policy pays to replace damaged windows with comparable windows, the same kind you had before. If local building code now requires impact-rated glass, the base policy covers the window. The upgrade is on you unless you have Ordinance or Law coverage.
In older homes, the electrical panels, plumbing, roofing materials, hurricane straps, and egress or accessibility requirements that didn’t exist when the home was originally built are common areas where coverage gaps can occur.
A standard homeowners policy replaces what was there but doesn’t account for what the code now requires.
What Ordinance or Law Coverage Pays For
The first area is the undamaged portion of the structure. Sometimes a loss is severe enough that code requires demolishing more than what the fire or storm actually damaged, and this coverage pays for the value of what you’re required to remove, even if it wasn’t touched by the loss itself.
The second is demolition and debris removal. Most people don’t realize these costs are deducted from Ordinance or Law coverage, not the dwelling limit, which matters more than it sounds. When demo and debris expenses are deducted from the dwelling limit, they reduce the amount available to actually rebuild.
The third is the increased construction cost, which is the core of what this coverage is designed to cover.
When the current code requires a more expensive rebuild than the original specifications called for, Ordinance or Law covers that difference.
How Much Do You Have?
Many policies build in some Ordinance or Law coverage by default, and it’s usually calculated as a percentage of your dwelling limit.
That percentage varies, and for older homes or areas with frequent code updates around storm resistance or energy efficiency, the default amount might not stretch as far as you’d expect.
Most people don’t think to ask about Ordinance or Law coverage until they’re already in the middle of a claim, which is exactly the wrong time to find out there’s a gap.
Knowing what your policy includes now is a lot easier than sorting it out later.
Ordinance or Law coverage fills the gap between what your policy is designed to restore and what current building codes require you to build.
For newer homes in stable code environments, the default amount that comes with your policy may be sufficient. For older homes, or anywhere codes have changed significantly around storm resistance, energy efficiency, or fire safety, it’s worth knowing what you actually have before you need it.
Your Boyd account manager can review your current policy and help you determine whether your coverage fits your home’s age, location, and rebuild exposure.
Because What Matters Most to You Matters to Us.
Frequently Asked Questions
Does every homeowner’s policy include Ordinance or Law coverage?
It’s included in many standard policies as a default percentage of dwelling coverage, but the amount varies. Some policies require it to be added as an endorsement. A conversation with your account manager is the best way to confirm what you have.
How do I know if my home is at risk for a coverage gap?
Older homes are more likely to be affected simply because codes have had more time to change since they were built. If you’re in a region that has seen active updates around hurricane resistance, energy efficiency, or fire safety, that’s worth factoring in as well.
Does Ordinance or Law coverage apply to partial losses?
It can if a covered loss requires repairs that trigger code-mandated upgrades, even to portions of the home not directly damaged. Ordinance or Law coverage may apply to those additional costs.
Is there anything Ordinance or Law coverage doesn’t cover?
It applies only after a covered loss. It doesn’t cover the cost of voluntary renovations or upgrades. The trigger is always a covered event that then requires code-compliant rebuilding.
