Glossary

Ordinance or Law Coverage

Also known as: Law and Ordinance Coverage, Building Ordinance Coverage

An endorsement that covers the added cost of complying with current building codes when repairing or rebuilding a damaged structure, including undamaged-portion demolition costs and increased construction costs that standard property coverage excludes.

Standard property policies pay to restore a building to its condition immediately before the loss, not to bring it up to current code, so an older building with grandfathered non-conformities can face substantial uncovered costs if a partial loss triggers a code requirement to demolish and rebuild the undamaged remainder, upgrade fire suppression or accessibility systems, or meet current seismic or wind-load standards. Ordinance or law coverage typically has three components underwriters review separately: coverage for the value of the undamaged portion that must be demolished, coverage for the cost of demolishing and clearing that portion, and increased cost of construction to meet current code. This coverage is particularly important for older vintage buildings in jurisdictions with aggressive code-upgrade triggers, and lenders financing value-add repositioning of older assets should confirm the limit is adequate relative to the building's age and local code stringency rather than accepting a boilerplate sublimit.