Commercial and Residential Ordinance and Law Coverage–Why is it
important? Potential Pitfalls.
Many jurisdictions have updated or implemented building codes to reduce disaster losses as a
result of the increasing frequency and severity of natural disasters. We saw this after Hurricane
Andrew and Hurricane Michael in the Panhandle of Florida. The likelihood that a property owner
may need to upgrade a structure after a loss to meet new requirements increases as more and
more of these codes are created and modified. This frequently involves tearing down damaged
building parts and replacing them. Similar to debris removal, this additional expense is handled
differently by commercial and residential property insurance.
In accordance with the majority of homeowner policies, insureds may spend up to 25% of the
dwelling property limit nder coverage A, on additional expenses required to restore damaged or
undamaged property into compliance with laws or regulations. The housing restriction still
applies to this "ordinance or legislation" coverage, which is additional or on top of the limit under
coverage A. So, for example if you have $400,000 in coverage under coverage A, you would
have an additional $100,000 with Ordinance and Law Coverage for a total of $500,000 to cover
your loss. Even with a sufficient housing limit, a homeowner might not have enough coverage
for additional building code compliance fees. Florida Allstar Public Adjusting, Inc, a Public
Adjuster handling claims throughout the state of Florida, can help you if you have a claim or just
a claim question.
Commercial Policies don’t typically have Ordinance/Law coverage.
Basic commercial property insurance normally do not cover expenditures that arise as a result
of the enforcement of building codes. If this coverage is desired, an endorsement is required to
obtain this coverage. Commercial ordinance and law coverage typically have complex clauses
addressing the damaged and undamaged parts of an insured structure, as well as whether the
cause of the loss