July 13

Ordinance of Law Insurance


Ordinance of Law Insurance

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quick highlights

Ordinance of law insurance covers the additional costs of meeting safety codes if your business is destroyed

Your property insurance only covers the cost of the building, not the cost to rebuild it

Co-insurance makes sense for low risk businesses like commercial office types

While you may have heard of ordinance of law coverage as part of commercial property insurance policies, it can also be part of your average homeowner’s insurance policy. 

At its core, ordinance of law is the specific policy that covers the costs to rebuild a commercial property after it is destroyed. 

It is one of the more obscure business insurance policies but very important if you own buildings that are a bit older and potentially out of code. 

Ordinance of Law insurance

What Is Ordinance of Law and What Does It Cover?

Ordinance of law insurance covers the additional expenses that come with rebuilding a property and keeping it compliant with all new safety regulations and building codes.

Many buildings exist out of compliance with various safety and building codes because they were built before the codes were put in place, this is referred to as a 'grandfather clause'. 

When a building is destroyed, the new building must be built to the new codes which can increase the cost of the building 10's or even 100's of thousands of dollars.  

Not only does it cover the value of the business, but it also covers any additional extensions or renovations necessary to keep the building compliant with safety regulations. 

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Ordinance of law can help businesses and families get through a devastating event that destroys their commercial property. 

Without it, you likely won’t have the funds to rebuild your home or business yourself. 

Ordinance of Law insurance

Most home insurance policies include ordinance of law. However, you need to check this for yourself to make sure. 

It’s important to note that ordinance of law does not cover all events that result in property destruction.

For example, if your policy doesn’t cover intense flooding, you may need separate flood insurance if you live in a flood zone. 

Dodo Definitions

insurance terms explained:

Independent Insurance Agency:  You can buy insurance from an indendent agency but they represent other companies (typically several).  For example, an independent agent who works for Acme Insurance Agency might sell you an auto insurance policy insured by Travelers Insurance.

What Types of Businesses Need Ordinance of Law Insurance?

If your business owns a commercial property, the odds are that you need ordinance of law coverage. 

Some commercial property insurance policies includes an ordinance of law clause. 

If you own a building that is older, you definitely want this policy as your building is probably not up to safety and building codes and if destroyed may be costly to upgrade. 

Ordinance of law will help you rebuild your business after a disaster that destroys the building.

There aren’t many business owners who can front the entire cost of rebuilding out of pocket and none who want to. 


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