Most people assume that if a covered fire or storm damages their house, the policy pays to put it back the way it was. Often that is not the whole story. Florida homes are rebuilt under today’s building rules, and an older house that was perfectly legal when it was built may need upgrades that a basic policy does not pay for. Law and ordinance coverage exists to close that gap. Here is how it works in Florida, in plain language.

Key takeaways

  • Law and ordinance coverage helps pay the added cost of rebuilding or repairing to current building laws after a covered loss.
  • Under Florida Statutes 627.7011, insurers must offer it, and it may be limited to 25% or 50% of your dwelling limit, as you select.
  • Unless you reject it in writing on an approved form, a Florida homeowners policy is deemed to include the 25% level.
  • It is most valuable for older homes, where the distance between “as built” and “to current code” is largest.

What law and ordinance coverage actually pays for

A standard dwelling coverage pays to repair or replace what was damaged with similar materials. It generally does not pay for the extra cost of meeting laws and ordinances that regulate construction, use or repair of property, or that require tearing down property, including debris removal costs. That is how Florida Statutes 627.7011(1)(a) describes replacement cost coverage without code costs.

Law and ordinance coverage is the add-on piece. The same statute describes a version that includes the costs necessary to meet applicable laws and ordinances, including the costs of removing debris. Think of it as extra money set aside for the “code upgrade” part of a rebuild, which your plain dwelling limit would not otherwise stretch to cover.

What Florida requires insurers to offer

Florida makes insurers put this choice in front of you. Before issuing a homeowners policy, the insurer must offer replacement cost coverage both with and without code-upgrade costs. When code-upgrade costs are included, the additional amount may be limited to 25% or 50% of the dwelling limit, as the policyholder selects.

A few details in the statute are worth knowing:

  • The 25% default. Unless the insurer obtains your written refusal of the offered coverages, the policy is deemed to include law and ordinance coverage limited to 25% of the dwelling limit.
  • A signed form. Rejecting the coverage or choosing a different level is done on a form approved by the Office of Insurance Regulation. If a named insured signs it, the law presumes an informed, knowing choice on behalf of all insureds.
  • A reminder every three years. The insurer must give you notice of the availability of this coverage at least once every 3 years.
  • A bold-type warning. Policy documents at issuance and every renewal must carry a statement in bold type, no smaller than 18 points, saying law and ordinance coverage is an important coverage you may wish to purchase and to discuss it with your agent.

The law’s stated intent is to encourage policyholders to buy enough coverage to protect themselves when an excluded event, such as the enforcement of building laws, combines with a covered event to produce a loss.

A simple example

Say a covered fire damages part of a home built decades ago. The insurer pays to repair the damaged portion. When the repairs are permitted, the local building department requires certain items to be brought up to current standards, such as wiring or fastening methods that did not exist in the original build. Those extra costs are not “repairing what was damaged”; they are compliance costs. Without law and ordinance coverage, they may come out of your pocket. With it, your policy can respond up to the selected percentage of your dwelling limit.

The dollar figures here are only an illustration. What your policy pays depends on its actual wording, the cause of loss and your selected limit.

When does it apply to the whole house?

Statute 627.7011(1)(b) adds an important limit. Law and ordinance coverage applies only to repairs of the damaged portion of the structure, unless the total damage to the structure exceeds 50% of the replacement cost of the structure. In other words, a small kitchen fire does not generally force the rest of the house to be rebuilt to code under this coverage; a loss that destroys more than half the structure is treated differently. Read your policy’s wording closely on this point, because some forms set out their own conditions.

Who should pay the most attention

How it fits with the rest of your policy

Law and ordinance coverage works alongside your other choices, not instead of them. Your dwelling limit, whether you have replacement cost or actual cash value, and your deductibles all shape what you receive. We cover the first in replacement cost versus actual cash value and the second in how the Florida hurricane deductible works. When a loss does happen, the claim timeline tells you what deadlines apply. And if you are buying a home, budget for these coverage choices up front; this look at the first-year cost of owning a Central Florida home is a good companion.

Questions to ask your agent

  1. Which law and ordinance level is on my policy today: 25%, 50% or none?
  2. Did I sign a rejection or selection form, and can I see a copy?
  3. Is the limit a percentage of my dwelling limit, and what is that in dollars?
  4. Does my policy apply it only to the damaged portion, and what happens if damage exceeds half the structure?
  5. Are there separate conditions for roof losses?

Frequently asked questions

Is law and ordinance coverage required in Florida?

Insurers must offer it, but you can reject it in writing on an approved form. If you do not, the policy is deemed to include the 25% level.

Is it the same as replacement cost coverage?

No. Replacement cost changes how a covered loss is valued. Law and ordinance coverage adds money for the cost of meeting building laws during repairs or rebuilding. The statute describes replacement cost offered with and without code costs.

Can I choose a higher limit than 25%?

Florida law allows the code-upgrade amount to be limited to 25% or 50% of the dwelling limit, as the policyholder selects. Ask your agent which options are available on your policy.

Does it cover flood or sinkhole damage?

It does not change what perils your policy covers. It only applies to the code-compliance costs of a loss the policy covers. Flood is generally excluded from homeowners policies, which is why a separate flood policy matters; see our flood insurance guide for Central Florida homeowners.

How often should I review it?

At each renewal. Building costs and your home’s age change, and the insurer must remind you of the option at least every three years.

Talk it through with a licensed agent

If you want to see which level your policy carries and what it would mean in dollars, request a review through our Florida property insurance quote page or call 407-476-6667. This article is general education, not legal advice, a coverage recommendation or an offer of coverage. Statutes and policy forms change, so confirm current rules and your policy’s wording with your insurer.

By Tariq AbouAdma, Florida Insurance Agent, NPN 16445652. Quality RE Insurance LLC, 336 Wilshire Blvd, Suite 274-229, Casselberry, FL 32707.