What does ordinance or law coverage do?

When a commercial building suffers a covered loss, the rebuild must meet current building codes. If those codes have changed since the original construction (more stringent fire suppression, accessibility requirements, energy codes, structural standards), the rebuild cost can be substantially higher than what the standard property policy pays. Ordinance or law coverage fills that gap, paying the additional cost of code upgrades during repair. It typically has three components: the increased cost of construction, the cost to demolish and remove undamaged portions of the building that must be rebuilt due to code, and the loss of value to the undamaged portions. Critical for older buildings, multi-story buildings, and properties in jurisdictions with strict code enforcement. Often a separate sublimit on the policy that needs to be set thoughtfully.