The short answer
Why It Matters
When your home is damaged by water or another covered event, local building codes may require repairs to meet current standards. Older homes often need upgrades, such as new electrical wiring, plumbing, or fire-resistant materials. These upgrades can add significant cost beyond simply replacing what was damaged.
A standard policy usually covers the cost to repair or replace the damaged property, but not the extra expense of bringing the rest of the home up to code. That is where the endorsement steps in. It helps cover the gap between the old and new construction standards, which can be substantial.
What It Typically Covers
The endorsement generally covers three areas: the undamaged portion of the building that must be brought up to code, the cost of demolishing and removing undamaged parts that block compliance, and the increased cost of construction due to updated laws. Each policy defines these coverages differently, so check your specific terms.
For example, if a water leak damages a bathroom wall, the code may require the entire wall to be rebuilt to meet current fire safety standards. The endorsement helps pay for that extra material and labor. It also covers the cost of raising a building to meet flood elevation standards, if required.
Bullets often include:
Coverage for undamaged parts of the building that need code upgrades
Demolition and debris removal of noncompliant structures
Increased construction costs from updated building laws
Possible coverage for zoning or land use changes
Limits and sub-limits that apply to each category
Exclusions for upgrades not required by code
How Much Coverage You Need
The amount of coverage you need depends on your home's age, local building codes, and the extent of renovations you plan. A good starting point is to have your home's replacement cost assessed. Many insurance professionals recommend coverage equal to 10 to 20 percent of your dwelling coverage, but that varies.
If you live in Mesa, consider the age of your home and any past remodeling. Older homes often have more code issues, so a higher limit may be wise. Talk to your insurance agent about what makes sense for your situation, and review your policy's limits regularly.
When It Applies
The endorsement only applies when a covered loss triggers the need for code compliance. If you voluntarily renovate your kitchen, it won't help. The trigger is the damage event, such as a burst pipe or flood, that requires you to repair and bring the structure up to current standards.
It also applies to partial losses. If a small section of your roof is damaged, and the code requires the entire roof to be replaced to match, the endorsement can cover the extra cost. Without it, you might pay that difference out of pocket.
How to Add It
Adding an ordinance or law endorsement is usually done when you purchase or renew your homeowners policy. You can request it from your insurance company, and they will add it for an additional premium. The cost is often modest compared to the potential savings.
Before you buy, ask your insurance agent to explain the specific limits and exclusions. Policies vary, and your insurer decides what is covered. Review your policy documents carefully to understand what the endorsement does and does not cover in your situation.
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Call Now (480) 898-4279Frequently asked questions
Is an ordinance or law endorsement required?
No, it is optional in most cases. However, some mortgage lenders or local regulations may require it, especially in high-risk areas. Check your policy and lender requirements to see if it is needed for your home.
Does it cover the cost of upgrading to green building standards?
It depends on your policy. Most endorsements cover only code-required upgrades, not voluntary green improvements. If your local code mandates energy-efficient features, those may be covered, but check your policy's wording.
Can I add it after a loss occurs?
No, you must add it before a loss happens. Once damage occurs, the endorsement cannot be applied retroactively. Review your coverage now to ensure you have the protection you need.