Often referred to as “bring up to code” coverage, Ordinance or Law offers additional reimbursement needed due to the enforcement of local ordinances or laws regulating construction and repair of damaged buildings following a covered property loss.  

Let’s say a kitchen fire destroys 50% of one unit in a midwestern duplex with battery-operated smoke detectors in main living areas. The current local ordinance requires hard-wired smoke detectors in every hallway, bedroom, and kitchen.  

A standard property policy would cover the cost to repair damage caused by the kitchen fire, but both units of the duplex (including the undamaged unit), will need to be newly equipped with hard-wired smoke detectors where they didn’t previously exist.  

If your investor client’s property policy includes an Ordinance or Law coverage endorsement, these additional expenses can be covered. Depending on the policy, the amount of additional coverage afforded can differ, and usually, the three components of coverage will have unique limits.  

Not necessarily. Replacement Cost coverage is intended to replace damaged property with the same or like materials, NOT upgraded materials. So, if local ordinances now require your investor client to have hurricane shutters and the home’s windows are damaged, the property coverage will provide reimbursement for the same kind of windows installed on the house before, but not the extra cost of the hurricane shutters.