Ordinance or Law Coverage in Florida: Who Pays for Code Upgrades After a Hurricane

Short answer

Ordinance or law coverage pays the extra cost to repair or rebuild to current building code. Florida homeowners policies must offer it, and commercial policies usually add it by endorsement.

A standard property policy pays to repair damage with like kind and quality. When a law or building code requires more than that, the extra cost is an ordinance or law loss. Florida law requires insurers to offer homeowners ordinance or law coverage at 25 percent or 50 percent of the dwelling limit (section 627.7011). Commercial policies typically handle it through an ordinance or law endorsement with three parts: loss to the undamaged portion, demolition cost, and increased cost of construction.

When code upgrades come into play after a hurricane

• Roofs. Under the Florida Building Code's existing building rules, repairing or replacing 25 percent or more of a roof section within 12 months can require the whole section to meet current code. Since 2022, section 553.844(5) says that for roofs built or replaced under the 2007 Florida Building Code or later, only the repaired portion has to meet current code. Older roofs still face the full requirement.
• Substantial damage in flood zones. If a building in a special flood hazard area is damaged by any cause to 50 percent or more of its market value, the local floodplain rules generally require the whole building to be brought into compliance, which can mean elevation. That is common on the barrier islands.
• Windows, doors, and openings in the wind-borne debris region, which covers the Panhandle coast.
• Electrical, life safety, and accessibility upgrades triggered by the scope of a major repair on a commercial or multifamily building.

The three parts of commercial ordinance or law coverage

Coverage A, loss to the undamaged portion. If code requires demolishing the part of the building that was not damaged, this pays for the value of that undamaged part. Without it, a policy pays only for the damaged portion.

Coverage B, demolition cost. The cost to tear down and haul away the undamaged portion that code requires removing.

Coverage C, increased cost of construction. The extra cost to build to current code, beyond what like kind and quality would have cost. This is often the largest piece after a hurricane, and it usually only pays once the work is actually done.

Each coverage may have its own limit, or they may share one. Many commercial policies come with a low built-in limit unless the owner bought more. Read the declarations and the endorsement before the scope is written.

Homeowners: the 25 or 50 percent offer

Florida section 627.7011 requires insurers to offer homeowners ordinance or law coverage equal to 25 percent or 50 percent of the dwelling limit. If you did not reject it in writing, many policies include the 25 percent option. On a $400,000 dwelling limit, 25 percent is up to $100,000 of code upgrade coverage, separate from the dwelling limit.

Insurers can hold back part of the ordinance or law payment until the work is performed, so keep permits and invoices that show the code-required items.

Condos and associations

Association master policies on older Gulf-front buildings are where ordinance or law coverage matters most. Many Panhandle condo towers were built before the 2002 and 2007 code changes. A significant roof or envelope repair on one of those buildings can trigger code work worth millions. The board should know the ordinance or law limits before the repair scope is negotiated, and the claim should price the code items separately so they are not lost inside a like-kind estimate.

How code upgrade costs get missed in a claim

• The carrier's estimate prices like kind and quality and leaves out code items entirely.
• Nobody asks the building department what it will require until after the claim is settled.
• The owner signs a release or settles before the permit plan review.
• Increased cost of construction is held back until the work is done, and the owner never comes back to claim it.
• Code items get priced inside the general scope instead of as a separate ordinance or law line, so they are hard to track against the limit.

Commonly Asked Questions

Related

• Commercial storm damage claims in Florida →
• Hurricane roof damage claims in Florida →
• Condo association hurricane claims →
• Hurricane Isaias damage claims: what to do now →
• Commercial property claims at CCG →

About the Author

James Coyne

Florida Licensed Public Adjuster, License W482618. Founder of Coyne Commercial Group, Firm License G350978, Sanford, Florida. Represents commercial property owners, condominium and HOA associations, and homeowners on insurance claims statewide.

Sources

• Fla. Stat. § 627.7011 : homeowners ordinance or law coverage offer, 25 and 50 percent options
• Fla. Stat. § 553.844(5) : roof repair and replacement exception for roofs built to the 2007 Florida Building Code or later
• Florida Building Code, Existing Building : roof repair and replacement provisions
• ISO Ordinance or Law Coverage endorsement (CP 04 05) : Coverages A, B, and C
• 44 C.F.R. § 59.1 and § 60.3 : NFIP substantial damage definition and floodplain management requirements

This page is for general information, not legal advice or a coverage determination. Confirm any deadline or obligation against your policy, your association’s governing documents, and current Florida law.