Property insurance policies generally have an “Ordinance or Law” exclusion, which means that the policy covers the building as it exists. However, it does not cover the cost of upgrading the building to current building codes and ordinances after a loss. Therefore, having “replacement cost” coverage for your building does not mean that you have “upgrade cost” coverage unless you purchase an “Ordinance or Law Endorsement” for your property. Even if a property policy offers some built-in Ordinance or Law protection, often the coverage isn’t sufficient for a significant loss.

Building codes and zoning laws affect every piece of property, big or small. These laws continually change, requiring new or improved features such as better wiring, handicap access, sprinkler systems, etc. If a loss situation triggers code upgrades, it could be financially devastating unless you have Ordinance or Law coverage.

While some consider this coverage necessary only for older buildings, laws constantly change, and newer buildings can be affected. This is an area of concern for all building owners.