Hurricanes have led to significant building code changes in Florida. Ordinance or Law Coverage provides for the additional cost to bring a building up to current building codes when significant repairs are needed. One of our Insurance Carriers, Tower Hill Insurance Group has created a great video explaining the importance of Ordinance or Law Coverage and the different options available for this product. If you would like to learn more about this coverage please contact us.
Below please find the transcript from the video featured in this article.
Hi I’m Joel Curran coming to you from the Gainesville, Florida offices of Tower Hill Insurance Group. With me today is Heidi Moore, the Claims Manager. Heidi’s been with Tower Hill for 15 years.
Do you know if your homeowner’s insurance policy covers you for Ordinance or Law? If you’re like most people, you’re not sure what this coverage is, let alone know if your policy includes protection from this exposure.
Ordinance or Law coverage provides for the additional costs to bring a building up to current building codes when major repairs are needed.
Florida has implemented significant building code changes over the past few years largely due to our experience with hurricanes. If your home was built before the code changes and it needs repairs, the repairs are often needed to be done according to the new building code.
Heidi, in your experience, you’ve had many real life situations where customers had the Ordinance or Law coverage and sometimes they did not.
Yes, we recently had a 1994 home that had tornado damage. They had plenty of coverage to repair the home, but had a code issue with the pool enclosure.
Tell us more about that code issue.
Well the policyholder had minor damage to the pool enclosure, but due to the Post-hurricane Wilma codes, they had to replace the pool enclosure. This would be an additional cost of $17,000.
And did the people have the adequate coverage? In this case they did because they chose the 25% option. They had $82,000 in Ordinance or Law to go towards the replacement of the pool enclosure. The additional cost for them was $17,000 but due to the fact that they had this, they did not have to incur the expense themselves.
So they were a satisfied customer?
They were very satisfied.
Heidi, have you had situations where the customer had to incur the additional costs themselves?
Unfortunately, yes. We had a 1987 home that was struck by lightning and this lightning caused a fire loss. There was damage to the interior and exterior of the home.
And what was the building code issue?
In this case the home was located in a coastal flood area. The Ordinance or Law stated that the homes had to be at 8 feet elevation, this particular home was at 4 foot elevation. Therefore we had to raise the foundation an additional 4 feet.
And what was the additional cost? The additional cost for this policyholder was $35,000.
And they did not have the coverage?
Unfortunately, they did not. They had selected the 0 option. So they had plenty of coverage for the fire damage, but they had to incur – at their own expense- the coverage for raising the elevation.
You can check your policy Declarations page to see what option is included. You should see a percentage figure that applies to the amount you insure your home for.
Not all policies are identical; some include 10% Ordinance or Law coverage unless you select another option. But usually you have the option to select 0% or none, 10%, 25% or 50%.
Florida statutes require insurance companies to get your signature for selections other than 25% and to notify you of your options at least every 3 years.
At Tower Hill, a look at recent new business shows that most of our customers purchase 25% Ordinance or Law coverage. A small number select 10% and 50% but close to 1 in 5 select the 0% option.
There are policy conditions and exclusions that apply and your agent is the best person to contact to explain these and to advise you on your selection. At Tower Hill, we want you to have the coverages you desire so if the unfortunate claim does occur, we are there for you. We want to help you get safely back in your home as soon as possible. We’ve been doing exactly that for 40 years.