Building codes change with surprising speed.
Ordinance or law coverage might be able to help.
Florida homeowners have a lot of freedom and flexibility when it comes to their homes. From paint colors to whether or not to install a pool, you have a choice about what changes to make to your property.
But if your house is destroyed, there are many projects that you will have to undertake, even if they’re out of budget.
Luckily, Ordinance or Law coverage can protect your home, your family, and your budget against covered losses.
What is Ordinance or Law Coverage?
Ordinance or law coverage is an endorsement to your property insurance that covers the costs of rebuilding your home up to current building standards after a covered loss.
This means that if you lose your 1920’s Craftsman to a hurricane, you won’t have to pay out of pocket to bring it up to the current building code.
It also kicks in if there are areas of your home that (even though they weren’t damaged in the covered loss) need to be torn down to bring them up to code.
And no, you don’t have the option not to fix it.
According to Florida Building Code 3401.7.2.6, “when repairs and alterations amounting to more than 50% of the value of the existing building are made during any 12-month period, the building or structure shall be made to conform to the requirements for a new building or be entirely demolished.”
This coverage isn’t just for older homes, either. Florida law requires the Florida Building Commission to update the Building Code every three years, so building codes can (and do) change regularly. In fact, unless your home was built in the last 6 months, it may already be out of compliance.
Do I Need Ordinance or Law Coverage In Florida?
While it’s not required by local law, Ordinance or Law coverage is a highly useful policy that no homeowner should be without. But the good news is that you may already have it.
Ordinance or Law coverage is offered as an endorsement (which means it’s not covered under a standard homeowners insurance policy), however, Florida insurance carriers are required by law to offer it and homeowners must opt out of coverage in writing.
If you don’t make a selection, your insurance company will likely choose your coverage limit—either 10%, 25%, or 50% of the value of the dwelling—on your behalf. For example, if your home is worth $400,000, and you opted for a 25% limit, you would have up to $100,000 in Ordinance or Law coverage.
What If I Don’t Have Ordinance or Law Coverage?
Any time you add endorsements to your policy, your premiums will go up. But insurance carriers don’t just offer Ordinance or Law coverage to fleece you out of a few extra dollars. This is a crucial form of insurance to have.
For example, say you purchased an historic Spanish Revival home for $500,000 and opted out of Ordinance or Law coverage. Ten years later, it’s flattened by a hurricane.
You were smart enough to purchase a standard homeowner’s policy, but it will only cover you up to the cost of the dwelling the way it used to be. The problem is, you aren’t allowed to recreate the home you had.
Because more than 50% of the house is destroyed, you’re now legally obligated to bring the entire structure up to the current building code. And building codes change every three years, so they’ve certainly changed a lot since 1926.
Which means you’ll be on the hook for the additional costs of bringing your historic home up to code.
Conclusion
Ordinance or Law coverage can get you out of a sticky situation with an older or historic home, but don’t take that to mean you don’t need it if your home is only a few years old.
Major disasters don’t announce themselves before they strike. Because you can never know when your home will be destroyed, it’s always best to carry as much coverage as you can truly afford—not whatever coverage you feel most comfortable with.
Even if your home was built three weeks ago, are you going to remember to change that 10% coverage limit to 25% or 50% when the building codes change? Will you even know when that happens?
At Harry Levine Insurance, we’ve seen what happens when homeowners settle for the bare minimum. Save yourself the time, hassle, and money by carrying the right coverage in the first place.
Want to know whether you have enough insurance? Give us a call so we can learn more about you and go over your options.
Comments (5)
Rick
January 17, 2025Jason,
First of all ,You are not my agent but I am looking to replace mine.
I have a home owners policy with a standard law and ordinace rider added to it because my home was subject to future Law and Ordinance costs . Hurricane Ian’s total damage from wind, rain and resulting flooding triggered my city to refuse to give us any permits to repair any damages to our home without a complete tear down and rebuild of our home to meet new home construction compliance in our location. I paid for extra law and ordinace coverage but I am told by my insurance company that even though part of the damage to my home was a covered peril , the fact flood water contributed to the damage allows them to pay nothing related to law and order. No where in my policy does it say if a covered peril and a non covered peril should occur together that the Policy would pay NOTHING. Is that the case with your policies and do you tell your clients the coverge might be worthless if a drop of flood water is involved? Please email me with your response as I might miss it on this thread Thanks
Julie Levine
January 22, 2025Hi, Rick! Thank you for sharing your predicament. It gets into some of the contractual intricacies of Property Insurance. I can’t give you definitive answers without seeing your actual insurance contract and learning some other data points from the claim scenario, but I can offer you the following: Insurance claims adjustment focuses heavily on what we call “proximate cause.” Simply put, what was the ultimate cause of loss? For instance, if you have water damage from rain that comes through a hole in your roof that was created by falling tree during a storm the proximate cause is WINDSTORM. The windstorm caused the tree to breach the structure. The rainwater damage’s proximate cause is the windstorm that felled the tree.
I can’t imagine it’s as simple as flood water contributing that negates an indemnification (payout) from Ordinance & Law Coverage. I would wager a guess – and I don’t know without seeing the denial letter – that the adjuster is saying that the proximate cause is Flood. Are you facing this issue solely regarding the triggering of Ordinance & Law Coverage, or is your entire claim being denied and attributed to Flood? Did you have Flood insurance? I’d love to take this offline and learn more in hopes of being able to understand and explain a bit more to you.
OLIVE CAMBELL
October 2, 2024Very helpful information.
Todd Oeltjen
January 5, 2024Hello Jason. I live in Orlando and I was reading through the different coverages, as my homeowners insurance doubled from last year, when I saw this one so I had to look it up. thank you for the clarification. I’m curious if you are seeing the same rising cost across all florida or is it certain areas. Thank you again. Sincerely, Todd Oeltjen
Julie Levine
January 8, 2024Hi Todd,
Thanks for reaching out! Unfortunately, over the last 24 months we have absolutely seen triple digit (100%+) rate increases become the norm. We’ve got some more great blog articles on exactly that situation, and we’ve got some gems on our YouTube channel too (https://www.youtube.com/channel/UCmR2IaMFbx-SDEBJ0-Opy-g). We got some much needed tort reform/legislative relief in December of 2022 and the Spring 2023 session, but those things will take a few years to play out and level the marketplace. Are you familiar with the old saying “There’s no such thing as free lunch”? We can all thank Florida for being the Wild West when it comes to litigation and Homeowner Insurance. Prior to the reforms of roughly a year ago nearly 80% of Homeowner Insurance claims in the entire U.S.A. that involved attorneys and litigation were in Florida. It was BIG BUSINESS worth billions to trial attorneys. As such, we’re all paying unbelievably high Homeowner Insurance premiums throughout the state; those that are well above national average. Contact your state representatives and thank them for the 2022/2023 reforms, but urge them to keep fighting to stop the trial bar from bankrupting Florida homeowners via frivolous lawsuits.
Thanks!
Jason Levine, MS, CPCU