In some home disasters, there is enough damage that major systems in your house must be replaced. For example, a fire could damage the wiring inside your walls. Due to changes in local building codes, your home must be rebuilt with improved electrical wiring, and compliance with these codes will increase the cost of reconstruction. Will your home insurance policy cover the costs necessary for this improvement imposed by building codes?
The necessary insurance coverage for such expenses is often called “ordinance or law.” Many homeowners insurance policies include a limited amount of ordinance or law coverage. However, based on a number of issues, such as age of the home or local code changes, your coverage might not be enough if you must bring many features up to current codes.
In some cases, this coverage will be necessary to cover compliance costs associated with portions of the home that are not damaged. For example, required repairs on the wind-damaged portion of the home may trigger the code for the entire house, not just the portion damaged.
If your homeowners insurance doesn’t include ordinance or law coverage, you may be able to add it for a small additional premium.
Learn more about home insurance.