Ordinance or Law Coverage
What this clause says
This policy is endorsed to cover the increased cost of construction and the cost to demolish and clear the site of undamaged portions of the building, when reconstruction of a damaged building is required to comply with the minimum standards of any building, zoning, or land use ordinance or law in effect at the time of loss.
What this means in plain English
Ordinance or law coverage pays the extra cost of rebuilding to current codes after a covered loss. Older buildings were built to older codes; after a partial loss, the local building department may require the entire structure, or the rebuilt portion, to meet current wind, electrical, or accessibility codes, which the base policy does not cover. The endorsement has three parts: the value of the undamaged portion that must be torn down, the cost of demolition, and the increased cost of code-compliant construction.
What it means for an HOA board
This is the endorsement most often missing on older community-association buildings, and the one that produces the largest surprise special assessment. A 40-year-old building damaged in a storm can face a code-upgrade bill that dwarfs the base reconstruction cost, and without ordinance or law coverage the association funds the difference. Confirm all three coverage parts are present, and that the increased-cost-of-construction limit is a meaningful percentage of the building value rather than a token amount.
Program notes
Confirm not just that the endorsement exists but that all three parts carry real limits. A policy that shows ordinance or law with a nominal increased-cost sublimit is close to no coverage on a code-heavy rebuild.
How this evaluates
The Policy Checker applies these rules in order; the first match wins.
has ordinance or law is set -> Compliant: Ordinance or law coverage is in place to absorb code-upgrade costs after a loss. has ordinance or law is not set -> Gap: No ordinance or law coverage. On an older building this is the most common source of a large post-loss special assessment.
See this in your policy
Check this clause against your master policy.
Run the Policy CheckerRelated clauses
Common questions about this clause
- What does ordinance or law coverage pay for after a covered condo loss (demolition and increased cost of construction)?
- What are ordinance or law coverage A, B, and C, and does our condo need them?
- What is ordinance or law coverage and does our condo need it?
- How do HOA insurance deductibles work?
- How do I read my HOA insurance declaration page?