What Is Law Insurance and Do I Need It?

Law insurance helps cover the costs to rebuild up to current building codes if a covered peril damages your property. Learn more here.
Written by Bonnie Stinson
Reviewed by Melanie Reiff
Updated on Jun 01, 2022
Law insurance, also known as “ordinance or law coverage,” helps cover the fees associated with rebuilding your home to code if it’s damaged by a covered peril. If your local regulations require you to rebuild your home in a certain way, this coverage may kick in to cover the cost of compliance.
How does it work? Say you bought a beautiful older home—but it burns down in a fire. Now, you have to rebuild it up to today’s building codes. That could require new wiring, different fencing, and perhaps even a new septic system. Law insurance can help you pay for these extra costs.
Insurance can be confusing, but it’s important to ensure that you have the right coverage.
, the home and
car insurance
shopping app, has put together this quick guide to understanding law insurance.
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What is law insurance?

Law insurance protects you from paying the extra cost of remodeling to fit updated building codes if your property is damaged or destroyed by a covered peril. 
This type of insurance is also known as building codes coverage or ordinance coverage.
Most cities, counties, and states have codes that guarantee buildings are constructed or remodeled to certain safety and aesthetic standards. The difficult part is that building codes tend to change frequently
Now, building code changes don’t usually apply to existing structures. But if some disaster compels you to renovate or remodel—if your garage burns down or a windstorm destroys your living room, for example—your new renovation must conform to the newest building codes.
With law insurance, you’ll get help covering the cost of rebuilding to code.

What does law insurance cover?

Law insurance covers some of the cost of remodeling your home after a covered incident if you find yourself in a situation where the current structure violates new building codes.
The building may need a different plumbing or electrical system, a new HVAC system, better weatherproofing, improved roofing or fencing, or even a reduction in the size of open spaces (this is very common in older commercial buildings).
Here are some of the activities that your policy could cover:
  • Construction
  • Demolition
  • Remodeling
  • Renovations
This policy will also reimburse you for the undamaged portion of your home if you need to demolish it entirely. In some states, you can be legally compelled to demolish a building if more than 50% of it is damaged.
One final reminder: this policy only applies when the damage results from a
covered peril
. You cannot simply decide to remodel your basement and cash in on your law coverage policy to cover costs.

Do I need law insurance?

Law insurance is often included as an additional coverage in your standard homeowners policy. However, your coverage may be capped at 10% of your home’s dwelling coverage amount. That amount of money really won’t cover much.
This is optional coverage, but there are two very good reasons to get law coverage:
  • You live in an area with strict building codes
  • You live in an older home with outdated systems
For example, if you live in a state like
, you must demolish your entire house if more than 50% of it is damaged. Yikes!  
Fixer-upper and older homes may work just fine for you and your family, but they often hide outdated plumbing and wiring systems. If a disaster wipes out your home, do you have the cash to pay for a complete rebuild that’s up to modern building codes?
If you want to increase your protection against this type of situation, you can get a law endorsement or add-on to increase your limit to 25% or 50% of your dwelling coverage.
It’s not pleasant to think about future disaster scenarios, but you’ll want to have a plan in place well before something happens. Otherwise, you’ll be stuck paying thousands of dollars out of pocket. 

Finding the right insurance policy

Insurance is the best way to protect yourself from future disasters. While you can’t prevent windstorms or water damage, you can take out an affordable insurance policy that will reimburse you for damages if the worst should happen.
app is a good place to start if you want to save money on home, renters, or car insurance. A licensed broker, Jerry does all the hard work of finding cheap quotes from the top name-brand insurance companies and buying new home or renters insurance. Jerry can even help you cancel your old policy.
And to ensure you always have the lowest rate, Jerry will send you new quotes every time your policy comes up for renewal, so you’re always getting the coverage you want at the best price. This level of service is why Jerry earned a 4.6/5 rating on the App Store and made it the top insurance app in the country.
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