Q.  What would be a reasonable estimate one could make for in adding this Ordinance or Law coverage?  I read your paper Law & Ordinance Coverage, Is it Illusionary? (very informative/readable and liked his coined term "Nature's Casino") this is what an insurance company attached to their policy application. I was laid off from work and am working with extremely limited funds.  If you could direct me to a resource or person who could answer my question it would be sincerely appreciated.

LIMITS OF LIABILITY

AMOUNTS OF INSURANCE

Ordinance or Law Coverage will include the increased costs you incur to repair a damaged structure, or to construct a replacement structure, in order to comply with the enforcement of any local, state or federal law, ordinance or regulation affecting repair or construction of such structures.

The policy will provide an Ordinance or Law coverage grant of 25% of the Coverage A limit. An optional Ordinance or Law endorsement allows you to increase this amount to 50%, 75%, 100% or more. You may reduce Ordinance or Law Coverage to 10% of the Coverage A limit of liability for a premium savings.

□ 50%           □ 75%           □ 100%    □ Other (increments of 25%)

□ I/We wish to REDUCE Ordinance or Law Coverage to 10% of the Coverage A Limit of Liability for a premium savings. If you choose to reduce Ordinance or Law Coverage to 10% please date and sign form below.

□ I/We understand that I/we can request this coverage at any time this policy, or a renewal policy, is in force and, if I do, coverage will not become effective:

1. when a storm or hurricane watch or warning is issued for the State of Florida by the National Weather Service

2. during a storm or hurricane and

3. for 72 hours after the storm or hurricane watch or warning is canceled by the National Weather Service.

A. Thank you for your compliment about my paper. I have gotten a lot of positive feedback from people in the insurance industry as well as from policyholders like you.  This is a subject that is confusing at best, and very problematic when a loss occurs and the building department requires you to repair or replace damaged items to the current building code.

In regards to your question about how much law and ordinance property owners should carry, it depends in large part on how old your home is and how much the building code has changed since it was built. The cost to repair or replace damaged items that don’t meet current code above the replacement cost of  other damaged items is where this coverage kicks in.  As a rule of thumb, 25% should be adequate as it is an additional amount of coverage above the replacement limit or coverage A. So whatever you have in coverage A, 25% will be added to cover the cost of code upgrades that may be required. Of course you can buy more, but for the average homeowner 25% is reasonable. This may change if you are in a flood zone and  your damages exceeds 50% of the value, then you may have to raise the building or tear it down and rebuild to current FEMA height requirements. A very costly process as people in Super Storm Sandy have unfortunately found out.

By the way I have 25% L&O coverage on my home. 

If you have questions regarding any property insurance claim related issues please call 800.321.4488 or contact us to submit a question to one of our public adjuster or insurance claim experts.