Glossary

Ordinance or law

Coverage for the extra cost of rebuilding to current building codes after a covered loss, which a standard property policy excludes or sharply limits.

Also called: ordinance or law coverage, building code coverage, code upgrade coverage, CP 04 05

When a covered loss damages an older building, the city may require the rebuilt structure to meet today's codes: sprinklers, accessibility upgrades, wind or seismic standards, new setbacks. A standard commercial property policy excludes the cost of complying with those laws, apart from a small additional coverage. In the ISO CP 00 10 form, increased cost of construction pays the lesser of $10,000 or 5% of the building limit.

The ISO Ordinance or Law Coverage endorsement, CP 04 05, supplies the real protection in up to three parts. Coverage A pays for the loss of the undamaged portion of the building when the code forces its demolition. Coverage B pays the cost to demolish and clear it. Coverage C pays the increased cost of construction. Say a fire destroys 60% of a 1960s building in a town that requires full demolition once damage passes 50% (a hypothetical). Without the endorsement the owner would absorb the undamaged 40% and the upgrade costs.

Delay is the other half. The period of restoration in a business income form does not include extra time that code enforcement requires, so a separate extension is needed to cover lost income during it. Older, historic or nonconforming buildings carry the most exposure, and lenders often require the coverage. Ask your broker which of A, B and C your limit includes. The guide on ordinance or law coverage explains how to choose limits, and period of restoration defines the income side.

Last reviewed October 10, 2026

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Related terms

Replacement cost A valuation basis that pays the cost to repair or replace damaged property with like kind and quality, without deducting for depreciation. Period of restoration In a business income policy, the time for which lost income is covered, from a waiting period after damage until repairs should be done or operations resume. Exclusion A policy provision that removes coverage for specified perils, property, people or types of loss that the insuring agreement would otherwise include. Insurance to value Carrying a property limit that matches the full value of what you insure, so a loss is paid in full and no coinsurance penalty applies. Causes of loss form The part of a commercial property policy that lists which perils are covered, offered in basic, broad and special versions of increasing breadth.

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Builder's risk insurance: covering a building while it is under construction Builder's risk insurance covers a structure and its materials during construction or renovation. Who buys it, what it excludes, soft costs, and when it ends. Filing business insurance claims after a hurricane or wildfire How to protect property, report the loss, sort wind from flood and smoke from fire, claim business income and work the clocks after a hurricane or wildfire. The commercial property claim process, step by step How a commercial property claim moves from first notice to final payment: inspection, scope and estimate, proof of loss, ACV and replacement cost payments. The endorsements small businesses most often need The endorsements contracts and coverage gaps most often call for, with ISO form numbers: additional insured, waiver, primary, ordinance or law and more. Construction cost inflation and your property limits How rising rebuilding costs create underinsurance, the 2026 cost indexes to watch (Verisk 360Value, BLS PPI) and how coinsurance and agreed value respond. ESG and the insurance market: what it means for your coverage ESG reaches business insurance through underwriting appetite, greenwashing and governance claims, green rebuilding endorsements and politics.

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