When was the last time you relaxed in your cozy armchair near the fireplace, sipping a warm drink and reading your local building codes? Most likely, it hasn’t happened recently. However, it’s crucial to understand that these building codes, which regulate everything from your home’s plumbing system to its electrical wiring, are essential and subject to regular changes, often occurring every few years.
Here’s why this matters to you: If your home is damaged and needs to be rebuilt, you must adhere to any new building codes in your community. Unfortunately, standard homeowners insurance policies do not cover the additional expenses of complying with these new codes.
That’s where building ordinance or law coverage comes into play. This type of policy rider, also known as building codes coverage, can be a valuable addition. Let’s delve into what it entails, what it covers, and reasons why you might find it necessary.
If you must rebuild your home or other structures on your property, ordinance or law coverage will pay for the increased costs associated with adhering to new building codes.
What is Building Ordinance or Law Coverage?
Building ordinance or law coverage is an add-on to your homeowners insurance policy that covers the expenses of bringing your home and other structures up to code when they require reconstruction after a covered loss.
For instance, let’s imagine that your home insurance policy covers fire damage (which most policies do). If a fire damages 70% of your home’s structure and your city enforces a building code rule that requires tearing down and rebuilding the entire structure when over 50% is damaged, your insurance will only cover the replacement costs for the 70% that was damaged. This amount would not be sufficient to rebuild your entire home according to your city’s code.
This is where ordinance or law coverage becomes invaluable. It covers the expenses of tearing down the remaining 30% and rebuilding it, while also accounting for the costs of complying with the new codes.
What Does Ordinance or Law Insurance Cover?
Ordinance or law coverage provides three primary areas of protection if your home or other structures on your property are damaged:
- Required upgrades: This coverage pays for the increased costs of making sure your home complies with new building codes when you need to rebuild. It encompasses various aspects, such as electrical wiring, plumbing units, HVAC systems, roofing, and fencing, among others.
- Undamaged portion: If a building code mandates the demolition of your home, this coverage reimburses you for the intact portion.
- Demolition: Covers the costs of demolition and debris removal, as required by building codes.
Many policies offer ordinance or law coverage equal to a percentage of your policy’s dwelling coverage, typically 10%, 25%, or 50%. For example, if your dwelling coverage is $300,000 and you have a 10% ordinance or law policy, you would receive $30,000 to cover any required upgrades, reimbursements for the undamaged portion, and any applicable demolition costs.
New building codes may necessitate updates to your home’s electrical wiring, plumbing systems, HVAC systems, roofing materials, and fencing, among other features.
What Does Ordinance or Law Insurance Not Cover?
Ordinance or law coverage only comes into effect after your home or structures have been damaged by a covered peril in your policy. It does not cover the costs of bringing your home up to code after renovations or routine maintenance.
For example, if you decide to remodel your basement and realize that you need new electrical wiring to comply with the city’s code, your ordinance or law policy will not cover those costs. However, if your basement needs to be redone due to fire damage, your policy will cover the expenses of modernizing the electrical wiring to meet the new code.
Do I Need Ordinance or Law Coverage?
The expenses can quickly accumulate if you need to rebuild your home and adhere to new local building codes, particularly if you reside in an older home that hasn’t received renovations in decades. Consider the costs involved in overhauling your plumbing, air conditioning, and electrical systems. Ordinance or law coverage ensures that you won’t have to pay these costs out of pocket.
Furthermore, if you live in a state where demolishing your home is mandatory if over 50% of it is damaged, this type of coverage becomes even more critical. Remember that your home insurance policy only covers the damaged portion of your home; it does not include the costs associated with demolition and rebuilding.
Take a moment to review your home insurance declaration page. Do you see ordinance or law coverage listed? At Garrity Traina, our insurance policies include ordinance or law coverage as a standard feature, along with unique benefits such as enhanced rebuilding coverage and four times more coverage for your computers and home equipment. Chat with our experts at Garrity Traina today to learn more.