Building codes change with surprising rapidity.
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 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 2021 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 3401.7.2.5, “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.”
Further, Florida law requires the Florida Building Commission to update the Florida 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 Have Ordinance or Law Coverage?
Ordinance or Law coverage is offered as an endorsement, which means it’s not covered under a standard homeowner policy.
However, Florida insurance carriers are obligated by law to offer this coverage, but homeowners may opt out (in writing) if they decide to go without it.
If you don’t make a selection, your insurance carrier 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 extra work it takes to bring your historic home up to code.
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.