Ordinance or Law Coverage for Homeowners

Your standard homeowners policy covers what it costs to repair or replace the damaged portion of your home. What it does not cover is what it costs to bring the rest of your home up to current building codes during that repair. That gap is what ordinance or law coverage fills.

What Is Ordinance or Law Coverage?

After a covered loss, local building codes may require you to make upgrades to the parts of your home that were not damaged. Electrical systems must meet current standards. Plumbing must comply with updated codes. In some jurisdictions, if more than 50% of your home is damaged, you may be required to demolish the entire structure and rebuild from scratch, even if half of it was untouched by the original event.

A standard homeowners policy pays for the damaged portion only. Ordinance or law coverage picks up three costs your base policy excludes:

Loss to the undamaged portion: If local ordinance requires demolishing an intact section of your home, this coverage pays for that loss.

Demolition costs: The cost of tearing down the undamaged portion before rebuilding.

Increased cost of construction: The added cost of rebuilding to current code rather than original specifications.

Why It Matters in the DMV

The DC, Maryland, and Virginia area has a significant share of older housing stock. Homes built in the 1950s, 60s, and 70s across Montgomery County, Arlington, and DC neighborhoods like Petworth or Capitol Hill were constructed under very different electrical, plumbing, and structural codes than what is required today.

When a house fire or major water loss requires a partial rebuild in these areas, the code upgrade costs can be substantial. Knob-and-tube wiring must be replaced. Older cast iron plumbing may need to come out. HVAC systems must meet current energy standards. Adjuster’s International estimates that code compliance requirements can increase claim costs by up to 50%.

After Hurricane Ida caused extensive flooding in the Mid-Atlantic region in 2021, homeowners in parts of Maryland and Northern Virginia found that rebuilding required significant code upgrades that their standard policies did not cover. That is a gap ordinance or law coverage directly addresses.

How Much Coverage Do You Need?

Ordinance or law coverage is typically available as a percentage of your dwelling limit: 10%, 25%, or 50%. On a $400,000 dwelling limit, that is $40,000, $100,000, or $200,000 respectively.

For older homes, 10% is often not enough. If your home predates 1980 and has not been substantially updated, the 25% or 50% option is worth the modest premium difference. The cost to upgrade a full electrical system, replace plumbing, and bring an HVAC system to current standards in the DMV market can easily exceed $75,000 to $150,000 on a larger home.

Is It Automatically Included?

Some policies include a basic level of ordinance or law coverage automatically (typically 10%). Many do not include it at all without an explicit endorsement. Check your declarations page or ask your agent exactly what ordinance coverage, if any, is on your current policy.

FAQ

How much does adding ordinance or law coverage cost?

For most homes, adding or increasing ordinance or law coverage costs $50 to $150 per year. For older homes with higher replacement cost values, the premium is higher but still modest relative to the potential exposure.

Do newer homes need it?

Newer homes built to current code are less likely to face significant upgrade costs, but building codes continue to evolve. It is still worth carrying some level of coverage, especially in jurisdictions that actively update their requirements.

What does ordinance or law coverage not cover?

It does not cover losses from perils your base homeowners policy excludes, such as flood or earthquake. It only applies to code compliance costs arising from a covered loss on the base policy.