Most insured damage arises from a direct physical or financial loss to property. The main coverage in most policies is for any “loss or damage” arising from an insured event such as fire, hail, water etc. Yet many policies also cover repairs made necessary by operation of law even when property is not directly damaged by the loss.  Most people involved in the insured property realm refer to this coverage as Ordinance and Law coverage.

Ordinance and Law coverage is usually found in a section of the policy that is separate from the primary grant of coverage for all “loss or damage”.  It is often a subsection under “Supplemental Coverages” or “Additional Coverages”, or an amendment to the main policy form.  Finding this coverage can be difficult. I often read main policy forms that insurance companies use nationally that exclude Ordinance and Law coverage, but an amendment to the main policy form replaces this exclusion and provides coverage.  I believe this occurs because the amendment is meant to recognize state law that can vary by jurisdiction.

One jurisdiction where I practice is Minnesota. Minnesota state statute requires an insurer that offers full replacement cost coverage to repair property consistent with state building code that is in force at the time of the loss or damage.  Minn. Stat. § 65A.10 subd. 1. This statute is the reason why amendments to main policy forms from national insurance companies are written that replace an exclusion of Ordinance and Law with a statement of coverage.

While the law may impose a requirement for Ordinance and Law coverage the exact coverage depends on how the policy is written. Some Ordinance and Law coverage is limited to a certain dollar amount.  Other Ordinance and Law coverage must be paid for by “separate” premium payments.  In other words, the declarations (at the beginning of any policy) show a separate line item for a premium attributable to Ordinance and Law coverage.  Ordinance and Law coverage sections themselves vary between insurance committees.

One insurance company offers Ordinance and Law coverage in an amendment to the main policy form that spans two pages of eight-point font. There are separate sections for undamaged parts of a building, the cost to repair or demolish a site, and exclusions regarding mitigating pollutants, fungi, failures to previously address building code, and other monetary limitations.  Reading policies to understand coverage requires time and an attention to detail.

Other insurance companies offer Ordinance and Law coverage far more succinct than a two-page listing of coverages, exclusions, and exceptions to exclusions. What your policy provides absolutely requires reading the policy itself.  It is not wise to rely on marketing materials or the policy’s declarations.  Nor is it wise to simply read limited quotes from a policy from an adjuster. Policyholders owe it to themselves to actually read their own policy and determine the extent of Ordinance and Law coverage.

While Ordinance and Law coverage does vary between insurance companies those variations should not offer coverage less than what is required by state law.  I question whether insurance companies can limit Ordinance and Law coverage to a certain dollar amount when a state statute may require full coverage of all repairs made necessary by state and local building codes up to policy limits.

Should you have any questions about your ordinance and law coverage do not hesitate to contact me.