Ordinance & Law Coverage

Ordinance and Law (O&L) insurance, also sometimes called Code Coverage, is an add-on coverage you can purchase to supplement your Commercial Property Insurance policy. It provides financial protection for the additional costs associated with rebuilding your property to meet current building codes after a covered loss.

Who Needs O&L Coverage?

O&L coverage is particularly valuable for businesses located in areas with stricter building codes or those operating in older buildings. It's also a wise consideration for businesses that have undergone significant renovations or additions over time, as these might not comply with current codes.

Why Is O&L Coverage Important:

• Building Codes Evolve Over Time: Building codes are constantly updated to improve safety standards, energy efficiency, and accessibility requirements. What was legal when your building was constructed might not be the case today.
• Standard Property Insurance Might Not Cover Everything: While your property insurance policy will cover the cost to repair or replace the damaged structure, it might not account for the additional costs to comply with the latest building codes.
• O&L Coverage Bridges the Gap: Imagine a fire damages your restaurant kitchen. Standard coverage would help rebuild the kitchen, but O&L coverage would kick in if the current code requires upgrading the ventilation system, installing fire suppression equipment, or making the restrooms handicapped accessible – features not present in your original kitchen.

What Does O&L Coverage Typically Cover:

• Increased Reconstruction Costs: This covers the additional expenses required to bring your rebuilt structure into compliance with current building codes.
• Examples: Upgrade to electrical wiring, installation of sprinklers, improvements for accessibility for people with disabilities.

Key Points to Consider:

• Limited Coverage: O&L insurance typically only applies to the portion of the building that is damaged and being rebuilt. It won't cover upgrades to the undamaged parts of the structure.
• Policy Limits: There might be limits on the amount of coverage provided by O&L insurance. Discuss this with your insurance agent to ensure it aligns with the potential rebuilding costs of your property.
• Not Always Included: O&L coverage is not automatically included in your commercial property insurance policy. You need to specifically request it and pay an additional premium.

O&L insurance provides valuable protection for businesses by covering the additional costs of rebuilding to meet modern building codes after a covered loss. It helps ensure your business can resume operations swiftly and minimizes disruption caused by the need to comply with updated regulations.