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Ordinance or Law Coverage for Florida Home Owners

By July 19, 2019January 27th, 2023Florida, Homeowners, Hurricane

If you read the big black bold wording on your Homeowners policy, you may notice a reference to “Ordinance or Law” coverage. This coverage is often overlooked, but it’s an extremely important coverage for property owners, especially in Florida. Ordinance or Law coverage is an additional coverage that is typically included in all Homeowners policies. Ordinance or Law assists in paying for demolition costs & or increased construction costs as a result of newer building code enforcement or ordinances when repairing or replacing your dwelling after a covered insurance loss.

What All Does Ordinance or Law Coverage Cover?

In commercial policies there are 3 coverage parts of Ordinance or Law coverage. These are usually shown as 3 separate coverage letters and limits:

  • A: Loss to the Undamaged Portion of the Building
  • B: Demolition Costs to the Undamaged Portion of the Building
  • C: Increased Cost of Construction

However, in personal policies these coverages typically get lumped together in one limit. This limit which is shown on the declarations page is a percentage of the dwelling limit.

In the Additional Coverages section, a standard Homeowners policy states that it covers, “the increased costs you incur due to the enforcement of any ordinance or law which requires or regulates,” the following:

  • Construction, demolition, remodeling, renovation, or repair of a building covered under Coverage A (Dwelling)
  • Demolition and reconstruction of the undamaged part of the building covered under Coverage A (Dwelling)
  • Remodeling, removal, or replacement of the portion of the undamaged part of a building covered under Coverage A (Dwelling)

How Much Ordinance or Law Coverage is Typically Provided in Florida?

This standard Homeowners policy provides an additional 10% of the Coverage A or Dwelling limit for Ordinance or Law costs.

However, as most of you know, Florida is not a typical state when it comes to insurance. After the storms that wreaked havoc across our state in 2004 and 2005, the Florida legislature passed legislation to mandate Ordinance or Law coverage of at least 25%. Florida Statute 627.7011 requires all admitted Homeowners carriers to offer both 25% and 50% Ordinance or Law options. The only way that the insured can select a percentage of less than 25% is by written request. The statute goes on to state that any policy covering a home is deemed to include law and ordinance coverage limited to 25% of the dwelling limit, so if no selection is made 25% coverage is assumed.

Why Would I Need 50% Ordinance or Law Coverage?

In our opinion there are 2 main reasons, why you need Ordinance or Law coverage of 50%:

  1. Older Homes

Many of the homes in Pinellas county were built in the 1950s and 1960s. These homes are not built to today’s standards, even if they have been upgraded. The Florida Building Code is one of the tougher codes in the US, and it has led to more sustainable and durable homes. However, things such as flood elevation requirements, hard wired smoke detectors, reinforced concrete, hurricane clips or wraps, secondary water resistant barriers, and hurricane impact rated windows and doors can make the cost of building substantially more than what it would just cost to replace the building with like kind and quality.

  1. Loss to the Undamaged Portion of the Building

Section 3401.7.2.6 of the Florida Building Code states: “When repairs and alterations amounting to more than 50% of the value of the existing building are made during any 12-month period, the building or structure shall be made to conform to the requirements for a new building or be entirely demolished.” This means that if a fire, hurricane, or other covered loss damages over 50% of your dwelling, but the other portion is just fine, you must knock down the undamaged portion. Unfortunately, standard insurance does not pay for this loss to the undamaged portion of the building. It’s important to note that this type of loss can happen both to older buildings and newer ones. Therefore 50% ordinance or law coverage is recommended to all property owners.

Do All Policies Include Ordinance or Law Coverage?

The only policies in Florida which are required by law to offer Ordinance or Law coverage are Homeowners policies. This includes HO3 Homeowners and HO6 Condo Unit Owners policies. That means that Rental Dwelling policies (DP3), commercial property policies, and residential condo association policies are not required to offer coverage.

Citizens, which is one of the larger writers of rental dwellings (DP3s) in Pinellas does not offer Ordinance or Law coverage, but some of our other markets such as United, FedNat, Security First, and St. Johns do offer coverage by endorsement. If you have a rental dwelling, it’s imperative to understand whether or not your policy has any ordinance or law coverage.

Ordinance or Law coverage is one of the most necessary, but hardly known insurance coverages. Building codes are constantly changing in Florida. Even if you built a few years ago, ordinances or laws may have been passed which may now make it more expensive to rebuild your home. It’s extremely important to both know and understand the amount of Ordinance or Law coverage your policy provides, and how it can be used if your home is damaged by a covered loss.

For more information on Ordinance or Law coverage, please contact our agency at 727-345-0242 or contact Brian T. Ford, CPCU, CIC at