In the aftermath of a major property loss, home and business owners attempting to rebuild can be faced with the additional cost of complying with current building codes. Policyholders are often shocked to learn that standard insurance policies won’t help pay for the required upgrades.

Since property insurance coverage is based on either Replacement Cost or Actual Cash Value (ACV) of the pre-damaged property, these particular upgrades and associated costs are not included in the coverage.


"Do you have coverage to update your property to the new building requirements put in place? For example, you may have a turn of the century building that doesn’t have sprinklers or elevators and you have a fire, [and now] due to changes in codes, it needs to be renovated and be handicap accessible. Therefore, you have to install elevators, ramps, fire sprinklers, etc. So if these items didn’t exist there before, the insurance company is not going to pay you for those improvements unless you have Building Code Upgrade (Law or Ordinance) coverage. It’s one of the most important coverages you can secure."

Ron Cuccaro, Executive Chairman at Adjusters International
"Expecting the Unexpected" - Property Insurance Roundtable

What are some building codes that properties need to be compliant with?

Building codes are in place to protect “public health, safety and general welfare as they relate to the construction and occupancy of buildings and structures.”¹ These standards are enacted and enforced by a local council and can encompass:

  • Americans with Disabilities Act (ADA) Regulations, e.g. elevators, ramps, handicapped restrooms
  • Electrical, plumbing, and other mechanical systems
  • Energy provisions/consumption
  • Exits – stairs, halls, etc.
  • Fire walls and fire resistant materials
  • Foundations and other structural components
  • Minimum height requirements
  • Sprinkler systems

Examples like this point to an important coverage that can be added on to an insurance policy called Building Code Upgrade coverage, also known as Law or Ordinance coverage.

Building Code Upgrade coverage – An essential tool for recovery

A Building Code Upgrade endorsement provides coverage for the increased costs associated with making a damaged or destroyed property compliant with current building code standards. Property owners are not expected to update their property every time a new code is enacted; however, if the property needs to be rebuilt due to a disaster then it must meet the current regulations in place at the time of the loss– which can be extremely costly.

Building Code Upgrade coverage is crucial to a property owner’s recovery from a disaster. Our public adjusting experts recommend meeting with your agent or broker to fully understand what is covered or excluded from your policy, assess your property’s risk, and add on any applicable endorsements necessary that will aid in your recovery.

For additional information, visit:

¹:Ching, Francis D. K.; Winkel, Steven R. (2016-03-22). Building Codes Illustrated: A Guide to Understanding the 2015 International Building Code. John Wiley & Sons. ISBN 9781119150954.