Florida Insurance Network

Mention “Law or Ordinance” and people think you’re talking about a TV show or how to fight crime.

We’re talking about insurance because Law or Ordinance Coverage is worth knowing about, as anyone will attest who is unlucky enough to have learned about it the expensive way.

The standard Florida homeowners policy automatically carries Law or Ordinance coverage equal to 25 percent of the policy’s Coverage A limit. For an additional premium, you can increase coverage to 50 percent of the limit. And you can save a little money (very little) by reducing coverage to 10 percent of the policy’s limit.

To make the right choice, obviously, you need to understand what Law or Ordinance Coverage is.

Briefly stated, Law or Ordinance Coverage helps pay increased costs of construction, repair or demolition required by ordinance, law or building code.

Here’s an example. Suppose your house was built in 1994 or even earlier than that. And suppose your city or county commission passes a law or ordinance that requires new and remodeled homes to incorporate windows that meet the Dade County building code.

That’s somebody else’s problem, unless and until your windows are broken by wind or vandals or what have you. Now, it’s your problem, too, because you have to replace your broken glass with Dade County compliant windows, which are a hell of a lot more expensive than regular replacement windows.

Regular replacement windows are what your policy obligates the insurance company to buy for you, so you could be looking at an out-of-pocket cost of anywhere from $2,000 to more than $10,000 just to put windows back in your house.

This is where Law or Ordinance Coverage kicks in. It helps pay the difference between regular replacement cost and the higher cost imposed by law or ordinance. Now, instead of you breaking into the IRA to make up the difference, the insurance company pays.

So, how much Law or Ordinance coverage is enough for you? If you’re looking for a cut and dried formula, there really isn’t one but common sense will do. Just consider the age of your home and the number of code-compliant improvements added since it was built.

If your house is new or just a few years old, you probably can go with the standard 25 percent or even less, if you want to save a few extra bucks. If the house is 15 years old with original windows, for example, you might want to consider paying a little extra for 50 percent Law or Ordinance Coverage (remember, we’re not just talking about windows but roofs, plumbing, etc.).

If you really aren’t sure what’s right for you, consult a reputable insurance agent.