Adding a relatively inexpensive "law and ordinance endorsement" to your homeowners insurance policy could be a wise move, especially if the property is several years old.
Q: Our insurance agent has sent us a marketing brochure that touts something called a "law and ordinance endorsement," but it sounds as if it would simply duplicate the homeowners coverage that we already have. How do these endorsements work? Should we buy one?
A: Adding a law and ordinance endorsement to your existing homeowners policy would allow you to be reimbursed if your home is damaged or destroyed and extra costs are then incurred because the repairs must meet higher construction standards than your property does today.
Let's say that you live in an older home with a wood-shake roof, but that it's in one of the many communities across the U.S. that have recently changed their building codes to require expensive, fire-resistant tile roofs in all future new-construction and remodeling projects.
If you have a standard homeowners policy and your roof was destroyed or seriously damaged, the insurer would only be required to reimburse you for the cost of a new wood roof. You would have to reach into your own pocket for the extra cash needed to meet the city's new "tile only" law.
In other words, adding a law and ordinance endorsement to your policy today would shift the burden of paying for such a costly upgrade over to the insurance company if disaster ever strikes.
The endorsements are relatively inexpensive, and certainly worth considering if you live in an older home that might not meet current local codes. But you probably don't need such an endorsement - at least for now - if your home is relatively new and was built using the latest construction techniques and materials.
Call your agent to ask if you really need to purchase a law and ordinance endorsement. The brochure he mailed to you might just be part of a mass-marketing campaign, but it might also have been triggered by a recent change in local codes or laws that you haven't heard about.