What Is Ordinance or Law Coverage?

Ordinance or law coverage pays the extra cost of rebuilding to current building codes after a covered loss, with limits between 10% and 25% of your dwelling coverage.

Find out if you're overpaying for home insurance below.

Written by Mark Fitzpatrick

Updated: April 29, 2026

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Key Takeaways

Ordinance or law coverage pays for the extra cost of rebuilding your home following current building codes after a covered loss.

Some homeowners insurance policies do include a base amount of ordinance or law coverage (10% to 25% of dwelling coverage, which varies by providers), but many standard policies either exclude it entirely or offer it only as an endorsement.

Ordinance or law coverage has three parts: loss to the undamaged portion, demolition cost and increased cost of construction.

What Is Ordinance or Law Coverage?

Ordinance or law coverage pays the extra cost of rebuilding or repairing a home to meet current building codes after a covered loss. Some homeowners policies include a base amount of ordinance or law coverage, but many require a separate endorsement or rider for full protection.

Standard homeowners insurance coverage only restores the home to its previous condition, not to current code standards. A homeowner rebuilding after a fire may need upgraded electrical wiring or hurricane-rated windows that weren't required when the home was originally built, and standard coverage won't pay the difference.

3 Types of Ordinance or Law Coverage

Ordinance or law coverage breaks down into three technical components that address different cost categories triggered by a covered loss. Coverage A addresses the undamaged portion of the structure, Coverage B addresses demolition costs, and Coverage C addresses the increased cost of construction to meet current code. Not every insurer bundles all three, and some sell them separately.


Loss to Undamaged Portion	Pays for the value of undamaged parts of the home that must be torn down to comply with current codes (e.g., a home with 40% fire damage where the city requires full demolition).
Demolition Cost	Pays to demolish and clear the undamaged portions of the structure that code enforcement requires removed.
Increased Cost of Construction	Pays the additional cost to rebuild the home using materials and methods that meet current building codes rather than the codes in effect when the home was originally built.

How Much Ordinance or Law Coverage Do You Typically Get?

Most homeowners policies include ordinance or law coverage at 10% to 25% of the dwelling coverage limit. A home insured for $300,000 with a 10% ordinance or law limit has $30,000 available for code-compliance costs, which may not cover a full electrical rewiring plus structural upgrades. Homeowners can request higher limits from their insurer, and the added premium cost is modest relative to the exposure. If code-compliance costs exceed the ordinance or law limit, the homeowner pays the difference out of pocket.

What Does Ordinance or Law Coverage Actually Cover?

Ordinance or law coverage applies only to code-compliance costs triggered by a covered loss, not to routine upgrades or voluntary renovations. All four items below represent scenarios where this coverage takes effect after a covered loss activates the code-compliance requirement.

Upgrading Damaged Areas to Meet Codes

After a covered loss, ordinance or law coverage pays to bring damaged sections of the home up to the building codes currently enforced in the homeowner's jurisdiction, including updated electrical, plumbing or structural standards.

Rebuilding Undamaged Sections if Required

When local code enforcement requires tearing down undamaged portions of a home to complete a compliant rebuild, this coverage reimburses the value of those undamaged sections.

Demolition and Debris Removal Costs

Covers the cost of demolishing the remaining structure and removing debris when a partial loss triggers a full teardown under local ordinances.

Increased Construction Costs Due to New Regulations

Pays the difference between rebuilding with original materials and methods versus the upgraded materials and techniques current codes now require.

What Is Not Covered by Ordinance or Law Coverage?

Ordinance or law coverage does not apply to every situation involving building codes. It doesn't cover routine upgrades, maintenance-related repairs, damage from excluded perils or voluntary home improvements.

Routine Upgrades or Renovations

Choosing to remodel a kitchen or update a bathroom to meet current codes is a homeowner expense, not a claim, because there's no covered loss triggering the work.

Maintenance-Related Fixes

Repairs caused by neglect, wear and tear or deferred maintenance are excluded from homeowners insurance entirely, and ordinance or law coverage doesn't override that exclusion.

Damage Not Caused by a Covered Peril

If the underlying damage isn't covered by the homeowners policy (flood, earthquake, sewer backup without an endorsement), the code-compliance costs that follow are also excluded.

Voluntary Home Improvements

Upgrades the homeowner initiates without a covered loss, even if they bring the home closer to code, fall outside the scope of ordinance or law coverage.

What Ordinance and Law Coverage Is: Bottom Line

Ordinance or law coverage pays the extra cost of rebuilding your home to current building codes after a covered loss. Some homeowners policies include a base amount (10% to 25% of dwelling coverage; varies by provider), but many require a separate endorsement for full protection. Homeowners with older homes or homes in areas with strict building codes should review their policy limits and consider increasing coverage if the default amount won't cover a full code-compliance rebuild.

Ordinance or Law Coverage Definition: FAQ

These frequently asked questions cover how ordinance or law coverage works, what it includes and how much you may need based on your home's age and local building codes.

What is ordinance or law coverage in homeowners insurance?

Ordinance or law coverage is an endorsement that pays the extra cost of rebuilding a home to current building codes after a covered loss. Standard homeowners insurance restores a home to its previous condition, and this coverage fills the gap when local codes require upgrades the original structure didn't have.

Does homeowners insurance include ordinance or law coverage by default?

Some homeowners policies include a base amount of ordinance or law coverage (10% to 25% of dwelling coverage), while others require it as a separate endorsement. Check your declarations page or contact your insurer to confirm what's included.

What are the three parts of ordinance or law coverage?

The three parts are Coverage A (loss to the undamaged portion of the home), Coverage B (demolition costs) and Coverage C (increased cost of construction to meet current codes). Not every insurer bundles all three, so confirm which parts your policy includes.

Does this coverage apply to undamaged parts of a home?

Coverage A does not apply to every part of a home. It specifically reimburses the value of undamaged portions of the home that must be torn down to comply with a local building ordinance after a covered loss.

How much ordinance or law coverage do I need?

The right amount depends on your home's age, local code requirements and your dwelling coverage limit. Homeowners with older homes or homes in jurisdictions with recently updated building codes may need limits above the standard 10% to 25% included in most policies. The best home insurance providers offer affordable coverage with adequate ordinance or law limits.

About Mark Fitzpatrick

Mark Fitzpatrick, a Licensed Property and Casualty (P&C) Insurance Producer in Connecticut, is MoneyGeek's resident insurance expert. He has analyzed the insurance market for almost a decade, first with LendingTree and now with MoneyGeek, conducting original research on hundreds of insurance companies and millions of insurance rates for insurance shoppers.

He writes about economics and insurance on MoneyGeek, breaking down complex topics so people can have confidence in their purchase. Like all MoneyGeek analysts, Mark collects and analyzes independent cost and consumer experience data on insurance companies to provide objective recommendations in our content that are independent of any of MoneyGeek's insurance company partnerships.

His insights — on products ranging from car, home and renters insurance to health and life insurance — have been featured in The Washington Post, The New York Times and NPR among others.

Mark holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He started his career working in financial risk management at State Street before transitioning to analysis of the personal insurance market. He's also a five-time Jeopardy champion!

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