Does Homeowners Insurance Cover Building Codes?
Understanding Building Code Coverage
Homeowners insurance protects against many types of property damage, but coverage for building code upgrades isn’t always automatic. Building codes are local regulations that require certain construction standards for safety and energy efficiency. If your home is damaged and must be rebuilt or repaired, the city or county may require you to bring parts of your property up to current code. Standard homeowners' policies cover the cost to repair or replace damaged property, but they generally do not pay for the additional expenses of meeting newer building codes unless you have specific ordinance or law coverage added to your policy.
What Is Ordinance or Law Coverage?
Ordinance or law coverage is an optional endorsement that helps pay for costs associated with updating your home to meet current codes after a covered loss. For example, if a fire destroys part of your home and the building inspector requires new wiring, plumbing, or structural reinforcements that weren’t previously in place, this coverage will pay for those upgrades. Without it, the homeowner must pay the difference out of pocket.
This type of coverage can also help cover costs related to demolishing undamaged portions of the home if local codes require a full rebuild rather than partial repairs. It’s especially valuable for older homes, which are more likely to need extensive updates to comply with modern standards.
When Building Code Coverage Applies
Building code coverage only applies when a covered peril (like fire, storm damage, or vandalism) causes the need for repairs. It does not cover improvements or code upgrades made voluntarily. For instance, if you decide to renovate your home to meet new codes without any damage occurring, your insurance won’t reimburse those costs.
Why It’s Important to Check Your Policy
Many homeowners assume their standard policy includes this protection, but that’s not always the case. Reviewing your coverage and discussing ordinance or law endorsements with your insurance agent can prevent unexpected expenses during rebuilding. The cost of adding this endorsement is usually minimal compared to the potential out-of-pocket costs of major code upgrades.
Conclusion
While homeowners' insurance typically covers repairs from covered events, it won’t automatically pay for bringing your home up to current building codes. Adding ordinance or law coverage ensures you’re fully protected—and compliant—when it’s time to rebuild.
