How much ordinance and law coverage should I have?
On a pre-1978 LA apartment building, ask for coverage B and C at 10% to 25% of the building limit each, and more than that if the building is very old or has had additions. Coverage A should sit at the building limit, and on most policies it already does.
80% of LA County's apartment buildings, counting the 68,466 with a recorded year built, went up before 1978. After a serious loss the city does not let you rebuild one of them the way it was. You rebuild to today's code. Ordinance and law is what pays for that difference, and it is the coverage most often missing from a policy handed from seller to buyer.
The three parts
| Part | What it pays for | What to ask for |
|---|---|---|
| A | The undamaged part of the building the city makes you tear down because the damage crossed a threshold. | Included, usually at the building limit. |
| B | Demolition and debris removal of that undamaged portion. | 10% to 25% of the building limit. |
| C | The increased cost to rebuild to current code: seismic, electrical, plumbing, fire sprinklers, accessibility. | 10% to 25% of the building limit, more on very old buildings. |
A worked example
A 1962 building, 9 units, 6,800 square feet. Replacement cost about $2.2 million. A fire destroys 60% of it. The city requires demolition of the rest and a code-compliant rebuild. Without ordinance and law, the policy pays to put back what burned, as it was. The owner pays to demolish the standing 40%, and pays the difference between 1962 construction and 2026 code. That gap runs 20% to 35% of the building value on the files I see.
Questions owners ask me about ordinance and law
- How much ordinance and law coverage should I have on an older building?
Start at 25% of the building limit for coverage B and for coverage C on anything built before 1978, then work down only if the building has already been brought up to code. On a newer building 10% is usually enough. - What is the difference between ordinance and law A, B and C?
A pays for the value of the undamaged part you are forced to demolish. B pays to demolish and haul it away. C pays the extra construction cost of building back to today's code. A is the value, B is the demolition, C is the upgrade. - Is ordinance and law included in a standard commercial policy?
Coverage A usually is. B and C are often a small sublimit or missing entirely, and on inherited policies they are the first thing I look for. Check the declarations page, not the proposal. - Do I need ordinance and law on a building built after 1978?
Less of it, but not none. Codes have changed several times since, and seismic, sprinkler and accessibility requirements are where the cost shows up after a large loss.