November 20, 2018

Ordinance and Law Coverage, Insurance Series – Part 3



Ordinance and Law Coverage

Ordinance and Law coverage, also called Increased Cost of Compliance coverage in flood policies, is a supplemental insurance coverage that pays the extra cost of bringing structures into compliance with applicable ordinances or laws.

Although it often comes into play when there is property damage, ordinance and law coverage does not insure against the risk of property damage itself.  Ordinance and law coverage therefore falls outside of Florida’s Valued Policy Law, even if the structure needing to be brought into compliance with ordinances and laws is a total loss.

Accordingly, an insured cannot use the simplified mechanisms of the Valued Policy Law to make a claim on the policy limits.  Instead, an insured must demonstrate he incurred an actual loss in the form of increased costs before receiving payment under the coverage.  To incur means to become liable for the costs, but not necessarily to have expended the costs.  For example, an insured is said to incur the costs when local government officials require compliance with local ordinances as a condition to receiving building repair permits.

Ordinance and law coverage is important because homeowner’s policies often contain specific ordinance and law exclusions.  Without the supplemental coverage, homeowners must bear the costs of bringing their damaged structures into compliance with applicable ordinances and laws themselves.  This can cause serious concern for homeowners when rebuilding after a disaster because code compliance is often a priority for local governments as part of their disaster response efforts.  Recognizing this concern, Florida law requires that all homeowner’s insurers offer some form of ordinance and law coverage prior to issuing a homeowner’s insurance policy.

Clark Partington’s insurance team is equipped to answer questions related to your specific situation. With offices in Pensacola, Destin, Santa Rosa Beach, Tallahassee, and Orange Beach (Alabama), we are a full-service firm covering this part of the Gulf Coast.  To reach one of Clark Partington’s insurance attorneys, contact Jason Peterson at (850) 436-6469 or



This publication should not be construed as legal advice.  Its applicability is dependent upon specific facts and circumstances and is provided for informational purposes only.  You should not act upon this information without seeking advice from a lawyer licensed in your own state.[/vc_column_text][vc_separator css=”.vc_custom_1527256627102{margin-top: 20px !important;margin-bottom: 20px !important;}”][/vc_column][/vc_row]