Ordinance or Law Coverage
Also called: law and ordinance coverage, code upgrade coverage, building code coverage, increased cost of construction
Homeland Public Adjusters · Last reviewed: October 2026
Ordinance or law coverage pays the increased cost of repairing or rebuilding damaged property to comply with current building codes, including demolition of undamaged portions that code requires you to remove and the loss of value of those portions. Without it, the policy pays to put back what was there, not what code now requires. Florida insurers must offer it at 25% or 50% of the dwelling limit; on commercial policies it comes in three separate parts.
Full guide: Ordinance or Law Coverage on Commercial Property
Why it matters in Florida and New Jersey
Any home built before the current code edition will trigger upgrades on a significant repair: roof-to-wall connections, secondary water barriers, impact openings, electrical panels, plumbing, elevation in a flood zone, energy code. The Florida Building Code’s 25% rule (repairing more than 25% of a roof section within 12 months may require the whole section to be brought to code, depending on the code edition and local amendments) turns a partial roof claim into a code claim. New Jersey’s Uniform Construction Code and FEMA substantial-damage rules do the same on the coast.
Florida
§627.7011(1) requires insurers to offer, with the policy, ordinance or law coverage that limits the additional cost to 25% or 50% of the dwelling limit, as selected by the policyholder; a policy that already includes 25% must still offer the 50% option. The coverage is a percentage of Coverage A on top of the dwelling limit. The policyholder has to select it; a carrier that never made the offer, or that cannot prove the rejection, has an exposure beyond the policy’s printed limits.
The three parts on a commercial policy
- Coverage A, undamaged portion of the building. Pays for the loss in value of the undamaged part that code requires you to demolish.
- Coverage B, demolition cost. Pays to demolish and clear the undamaged part.
- Coverage C, increased cost of construction. Pays the extra cost to repair or rebuild to current code. Each part has its own limit, and many commercial policies carry only A, or a small C limit.
New Jersey
New Jersey carriers use the ISO ordinance or law endorsement on homeowners policies, typically 10% of Coverage A built into the form with the option to increase to 25% or 50%. There is no statutory offer requirement. After Sandy, the cost of elevating substantially damaged homes to the new base flood elevation showed how small a 10% limit is; the NFIP’s separate Increased Cost of Compliance coverage (up to $30,000) sits alongside it for flood.
How carriers use it against you
- Leaving code items out of the estimate because “that is not damage.” It is not damage; it is a covered cost of repair.
- Paying ordinance or law only after you have incurred the cost, with no advance against the limit.
- Applying it to the demolition but not to the increased construction cost, or vice versa.
- Not applying overhead and profit to the code work.
Worked example
Dwelling limit $400,000 with 25% ordinance or law ($100,000 available). Roof claim $48,000. Code upgrades triggered: secondary water barrier, new roof-to-wall straps, replacing non-compliant soffit venting, upgrading the electrical service mast: $19,600. The carrier’s estimate paid $48,000 less deductible; the claim is $67,600 less deductible, with the $19,600 paid from the ordinance or law limit.
Frequently asked questions
Is ordinance or law coverage included in my homeowners policy?
Does it pay to bring the whole house up to code?
Does the 25% apply to the loss or to the dwelling limit?
Can I collect ordinance or law coverage if I do not rebuild?
Related terms
Overhead and profit (O&P) is the general contractor's charge for running the job: overhead is the cost of doing business (office, insurance, supervision, permits), and profit is the margin.
Recoverable depreciation is the money your insurer withholds from a replacement-cost claim payment until you repair or replace the damaged property.
A policy exclusion is a provision that takes a cause of loss, a type of property, or a situation out of coverage that the insuring agreement would otherwise provide.
A roof payment schedule (roof surfacing payment schedule) is a policy endorsement that pays a roof loss at a percentage of replacement cost set by the roof's age and material, instead of full…
If this is your loss, call Homeland before you talk to the insurance company: Florida (305) 783-3777, New Jersey (732) 517-3777, 24 hours. A licensed public adjuster reviews the claim for free and calls you back right away. No Recovery, No Fee.
Sources
This article is for general information only and is not legal or insurance advice. Statutes, regulations and policy wording change, and how they apply depends on your own policy and the facts of your claim. Homeland Public Adjusters is a public adjusting firm, not a law firm.
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