Code Upgrade Coverage

What Is Code Upgrade Coverage?

Code Upgrade Coverage (also called “Ordinance or Law Coverage” or “Law and Ordinance Coverage”) is an optional insurance endorsement that pays for upgrades required by current building codes when you repair or replace your roof after covered damage. Without this coverage, you may have to pay thousands of dollars out-of-pocket to bring your roof up to current code standards.

Building codes evolve over time to improve safety and performance. Your roof was built to the codes in effect when it was installed, but when you replace it today, it must meet current requirements—which are often more stringent and expensive.

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Why Code Upgrade Coverage Matters

Building Codes Change Over Time

Since your roof was originally installed, building codes may now require:

Structural upgrades:

• Enhanced wind resistance standards
• Improved hurricane tie-down requirements
• Stronger decking materials or fastening
• Additional bracing or support

Fire safety improvements:

• Fire-rated underlayment in wildfire zones
• Class A fire-rated shingles
• Ember-resistant venting
• Ignition-resistant edge treatments

Energy efficiency standards:

• Reflective roofing materials
• Improved ventilation systems
• Radiant barriers or enhanced insulation
• Cool roof technology in certain climates

Water protection enhancements:

• Ice and water shield coverage requirements
• Improved flashing specifications
• Enhanced valley treatments
• Better drainage systems

The problem: Standard insurance policies typically only pay to replace what was damaged—not to upgrade it to current codes.

The Coverage Gap

Without code upgrade coverage:

Example scenario:

• Storm damages your 20-year-old roof
• Replacement cost for like-kind materials: $18,000
• Code-required upgrades: $6,500 additional
• Your out-of-pocket cost: $6,500

With code upgrade coverage:

• Storm damages your roof
• Insurance pays: $18,000 for replacement + $6,500 for code upgrades
• Your out-of-pocket cost: $0 (beyond your deductible)

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What Code Upgrade Coverage Pays For

Coverage A: Loss to Undamaged Portion

What it covers: The cost to demolish and replace undamaged portions of your roof when code requires it.

Example: A storm damages 40% of your roof. Current code requires that if more than 25% is damaged, the entire roof must be replaced to meet current standards. This coverage pays for replacing the undamaged 60%.

Why you need it: Many jurisdictions have “50% rule” or “25% rule” thresholds—if damage exceeds this percentage, the entire roof must meet current code, even undamaged sections.

Coverage B: Cost to Comply with Code

What it covers: The additional expense of materials, labor, or methods required by current codes that exceed the cost of standard replacement.

Examples:

• Upgrading from standard underlayment to synthetic underlayment (now code-required)
• Installing ice and water shield across a larger area than previously required
• Using enhanced fastening patterns for wind resistance
• Installing hurricane straps or additional structural reinforcement
• Upgrading to Class A fire-rated shingles in wildfire zones
• Adding improved ventilation systems

Why you need it: These upgrades can add 15-40% to your roof replacement cost, depending on your location and the age of your existing roof.

Coverage C: Increased Cost Due to Demolition

What it covers: Additional costs if codes require more extensive demolition than the damage alone would necessitate.

Example: Damaged sections could be patched, but code requires full removal to install proper underlayment throughout. This coverage pays for the additional demolition.

Why you need it: Complete tear-off and disposal costs significantly more than partial repairs.

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Common Code Upgrades Required

Wind Resistance Requirements

Enhanced fastening:

• Six nails per shingle instead of four
• Ring-shank nails instead of smooth-shank
• Specific nail placement patterns
• Specialty fasteners for high-wind zones

Edge securement:

• Starter strip requirements
• Drip edge installation standards
• Enhanced eave protection
• Gable end reinforcement

Structural reinforcement:

• Hurricane straps or clips
• Enhanced roof-to-wall connections
• Improved sheathing attachment
• Additional bracing for trusses or rafters

Cost impact: $1,500-$5,000+ depending on home size and wind zone

Fire Safety Upgrades

Material requirements:

• Class A fire-rated shingles (most stringent rating)
• Fire-resistant underlayment
• Ignition-resistant materials at roof edges
• Non-combustible materials for certain components

Wildfire-specific requirements:

• Ember-resistant vents
• Metal drip edge and flashing
• Enhanced attic ventilation screens
• Specified clearances from combustibles

Cost impact: $2,000-$8,000+ in high fire risk areas

Ice and Water Protection

Extended coverage areas:

• Valleys (often must be fully protected now)
• Eaves (typically 3-6 feet up from edge, depending on climate)
• Penetrations (skylights, chimneys, vents)
• Low-slope areas
• Dormer connections

Previous standard: Many older roofs have minimal or no ice and water shield.

Current requirements: Often 2-3 times more coverage area.

Cost impact: $800-$3,000 depending on roof complexity

Decking and Structural Upgrades

Sheathing improvements:

• Thicker OSB or plywood (5/8″ instead of 1/2″)
• Improved fastening patterns
• Specialty clips or supports
• Edge blocking or support

Framing enhancements:

• Additional support for heavy materials
• Code-compliant span corrections
• Proper ventilation pathways
• Load calculation requirements

Cost impact: $3,000-$10,000+ if extensive decking replacement needed

Ventilation System Requirements

Improved ventilation:

• Balanced intake and exhaust requirements
• Minimum net free area calculations
• Soffit vent specifications
• Ridge vent or alternative exhaust systems

Previous standard: Many older homes have inadequate ventilation by current standards.

Cost impact: $1,500-$4,000 for comprehensive ventilation upgrades

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How Code Upgrade Coverage Works

Policy Limits and Structure

Separate limits from dwelling coverage:

• Typically 10%, 25%, or 50% of Coverage A (dwelling limit)
• Higher limits available for additional premium
• May be capped at specific dollar amounts (e.g., $25,000, $50,000, $100,000)

Example:

• Dwelling coverage (Coverage A): $400,000
• Code upgrade coverage at 25%: $100,000 additional for code compliance
• Total available for roof with code upgrades: Up to $100,000 beyond standard replacement

Three-part coverage structure:

Most policies offer three components (A, B, C as described above), and you may purchase:

• All three together
• Coverage B only (most common configuration)
• Custom combinations based on risk assessment

How Claims Are Processed

Step 1: Standard damage assessment

• Adjuster evaluates covered damage
• Calculates replacement cost for like-kind materials
• Applies depreciation and deductible

Step 2: Code requirement determination

• Contractor or inspector identifies code upgrades needed
• Building department provides requirements in writing
• Estimates prepared for code compliance costs

Step 3: Code upgrade claim supplement

• Submit code upgrade costs as separate claim component
• Provide documentation of requirements
• Include contractor estimates for upgrades
• Reference policy’s ordinance or law coverage

Step 4: Combined settlement

• Insurance pays standard replacement cost
• Plus code upgrade coverage amount
• Minus depreciation (if applicable)
• Minus your deductible

Required Documentation

To claim code upgrade coverage, you’ll need:

Building department documentation:

• Written code requirements for your project
• Permit application showing required upgrades
• Inspector notes or requirements list
• Local ordinances or code sections cited

Professional estimates:

• Separate line items for code-required upgrades
• Comparison showing cost difference between old and new code
• Contractor explanation of why upgrades are necessary
• Material specifications meeting code requirements

Verification of necessity:

• Proof that upgrades aren’t voluntary improvements
• Documentation showing requirements are code-mandated
• Evidence that older installation doesn’t meet current standards

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Who Needs Code Upgrade Coverage?

High-Priority Situations

Older homes (15+ years):

• Building codes have likely changed significantly
• Original roof doesn’t meet current standards
• Multiple code updates have occurred
• Higher probability of extensive required upgrades

High-risk locations:

• Hurricane zones (enhanced wind resistance requirements)
• Wildfire areas (fire-rated materials and ember protection)
• Heavy snow regions (improved ice dam protection)
• Coastal areas (salt air and wind requirements)

Homes in areas with strict building codes:

• California (seismic and fire requirements)
• Florida (stringent wind and hurricane codes)
• Areas with recent code adoptions or updates
• Jurisdictions with aggressive enforcement

Properties with older roofing systems:

• Roofs installed before major code changes (pre-2000)
• Homes that have never had full roof replacement
• Properties with original roofs (20+ years)
• Roofs installed before current homeownership

Cost-Benefit Analysis

Coverage cost:

• Typically $25-$100+ annually depending on limits
• Minimal premium increase for substantial protection
• Often 10-25% of Coverage A costs only $50-$150/year

Potential savings:

• Code upgrades often cost $3,000-$15,000+
• Catastrophic code requirements can exceed $25,000
• Return on investment in first claim
• Peace of mind for older properties

General recommendation: If your roof is over 10 years old or you live in an area with evolving building codes, code upgrade coverage is highly advisable.

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Common Code Upgrade Scenarios

Scenario 1: Wind Damage in Hurricane Zone

Situation:

• 18-year-old roof damaged by hurricane
• Roof was built to 1995 wind codes (90 mph design)
• Current codes require 140 mph wind resistance

Code-required upgrades:

• Enhanced nailing pattern: $1,800
• Hurricane straps: $2,500
• Upgraded underlayment: $1,200
• Improved edge securement: $900
• Total code upgrades: $6,400

Without code coverage: You pay $6,400 out-of-pocket With code coverage: Insurance covers the $6,400

Scenario 2: Hail Damage in Wildfire Zone

Situation:

• 15-year-old roof with hail damage
• Property now designated in wildfire hazard area
• New codes require Class A fire rating and ember protection

Code-required upgrades:

• Class A fire-rated shingles: $2,200
• Fire-resistant underlayment: $1,500
• Ember-resistant vents: $800
• Metal drip edge and flashing: $1,200
• Total code upgrades: $5,700

Without code coverage: You pay $5,700 out-of-pocket With code coverage: Insurance covers the $5,700

Scenario 3: Partial Damage Exceeds Threshold

Situation:

• Storm damages 30% of roof
• Local code requires full roof replacement if damage exceeds 25%
• Undamaged 70% must be replaced to meet code

Costs:

• Damaged portion replacement: $9,000 (covered under standard policy)
• Undamaged portion required replacement: $21,000 (needs code upgrade coverage)
• Code compliance upgrades: $4,500 (needs code upgrade coverage)
• Total additional cost: $25,500

Without code coverage: You pay $25,500 out-of-pocket With code coverage: Insurance covers up to policy limits (often $25,000-$100,000)

Scenario 4: Decking Replacement Required

Situation:

• Roof damage reveals inadequate decking
• Current code requires thicker, properly fastened sheathing
• Full decking replacement necessary for permit approval

Code-required upgrades:

• Remove old 1/2″ decking: $2,500
• Install new 5/8″ code-compliant decking: $6,500
• Enhanced fastening: $800
• Structural repairs for code compliance: $2,200
• Total code upgrades: $12,000

Without code coverage: You pay $12,000 out-of-pocket With code coverage: Insurance covers the $12,000

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Policy Limitations and Exclusions

Common Limitations

Percentage caps:

• Coverage limited to 10-50% of Coverage A
• May not cover all costs if upgrades are extensive
• Higher limits available for additional premium

Dollar limits:

• Some policies cap at specific amounts ($25,000, $50,000)
• May be insufficient for major structural upgrades
• Review limits annually as construction costs increase

Scope restrictions:

• May only cover upgrades directly related to damaged areas
• Might exclude voluntary upgrades or improvements
• Typically limited to code requirements, not aesthetic preferences

Common Exclusions

Pre-existing non-compliance:

• Code violations that existed before the loss
• Upgrades needed regardless of damage
• Previous work that didn’t meet code

Voluntary improvements:

• Upgrades beyond minimum code requirements
• Aesthetic choices that exceed code standards
• Enhanced materials chosen for preference rather than code

Maintenance and repair:

• Issues resulting from poor maintenance
• Deterioration unrelated to covered loss
• Pre-existing damage or defects

Certain types of codes:

• Environmental laws (some policies exclude)
• Zoning changes
• Aesthetic or historical district requirements
• Non-building-code regulations

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How to Add Code Upgrade Coverage

When Purchasing New Insurance

Ask your agent specifically:

• “Does my policy include ordinance or law coverage?”
• “What percentage or dollar limit is included?”
• “What would it cost to increase the limits?”
• “Are all three components (A, B, C) included?”

Review your declaration page:

• Look for “Ordinance or Law” endorsements
• Check Coverage A percentage or dollar amounts
• Verify components included (A, B, C or just B)

At Policy Renewal

Annual review opportunity:

• Ask to add if not currently included
• Consider increasing limits as construction costs rise
• Reassess based on home age and code changes
• Typically minimal cost increase

Premium impact:

• Usually $25-$150 annually depending on limits
• 10% of Coverage A typically costs $50-$100/year
• 25% coverage might add $100-$200/year
• Cost varies by location, home value, and risk factors

For Existing Policies

Contact your agent to:

• Request coverage addition mid-term
• Discuss appropriate coverage limits
• Understand any waiting periods
• Review total premium impact

Most insurers allow mid-policy additions, though some may require waiting until renewal.

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Working with Contractors on Code Upgrades

Contractor’s Role

Identifying requirements:

• Knowledge of current local building codes
• Experience with permit requirements
• Understanding of jurisdiction-specific rules
• Ability to document necessary upgrades

Communicating with adjusters:

• Explaining why upgrades are mandatory, not optional
• Providing code citations and references
• Demonstrating cost differences between old and new code
• Supporting your code upgrade coverage claim

Documenting costs:

• Separating standard replacement from code upgrades
• Itemizing each code-required component
• Providing detailed material and labor breakdowns
• Supporting supplement requests with evidence

Red Flags to Avoid

Contractors who:

• Claim code upgrades aren’t necessary to save money
• Suggest avoiding permits to skip code compliance
• Offer to “hide” code costs in standard estimates
• Pressure you to not claim code upgrade coverage

These practices can:

• Void your insurance coverage
• Result in failed inspections and permit rejections
• Create liability if future issues arise
• Violate contractor licensing requirements

Always work with licensed, reputable contractors who prioritize code compliance.

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Questions to Ask About Code Upgrade Coverage

Questions for Your Insurance Agent

1. Does my policy include ordinance or law coverage?
2. What are the coverage limits (percentage or dollar amount)?
3. Which components are included (A, B, C)?
4. How much would it cost to add or increase this coverage?
5. Are there any exclusions specific to my policy?
6. How do I file a claim for code upgrade costs?
7. What documentation will I need?
8. Are there waiting periods before coverage becomes effective?

Questions for Your Contractor

1. What current building codes apply to my roof replacement?
2. How do current codes differ from when my roof was installed?
3. What specific upgrades will be required?
4. Can you provide separate estimates for standard replacement vs. code upgrades?
5. What documentation can you provide to support a code upgrade claim?
6. Have you worked with code upgrade coverage claims before?
7. Will you attend the adjuster inspection to explain requirements?

Questions for Your Adjuster

1. Does my policy include code upgrade coverage?
2. What limits apply to my policy?
3. What documentation do you need for code upgrade claims?
4. How should code costs be separated in estimates?
5. Can I submit a supplement for code upgrades after the initial claim?
6. Who determines what upgrades are code-required vs. voluntary?
7. How long does code upgrade claim processing typically take?

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Code Upgrade Coverage and Claim Settlements

Impact on Total Settlement

Example calculation:

Standard roof claim:

• Replacement cost: $22,000
• Depreciation: $8,000
• ACV: $14,000
• Deductible: $2,500
• Initial payment: $11,500
• Recoverable depreciation: $8,000

With code upgrades:

• Replacement cost: $22,000
• Code upgrade costs: $7,500
• Total RCV: $29,500
• Depreciation: $8,000 (on original roof only, not upgrades)
• ACV: $21,500
• Deductible: $2,500
• Initial payment: $19,000
• Recoverable depreciation: $8,000
• Total potential recovery: $27,000

Without code coverage, you’d pay the $7,500 out-of-pocket.

Supplement Process

Often, code requirements aren’t fully identified until:

• Tear-off reveals hidden issues
• Permit application identifies additional requirements
• Inspector visits and adds requirements
• Contractor discovers compliance issues

File a supplement claim:

1. Document newly discovered code requirements
2. Get revised contractor estimate
3. Submit to adjuster with supporting documentation
4. Reference your ordinance or law coverage
5. Request additional settlement for code costs

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Related Roofing Terms

• Claim: Formal request for insurance coverage including code upgrades
• Depreciation: Reduction in value; code upgrades typically aren’t depreciated
• Declaration Page: Shows whether you have code upgrade coverage and limits
• RCV (Replacement Cost Value): Full replacement cost plus code upgrades with proper coverage
• Supplement: Additional claim for code costs discovered after initial estimate
• Permit: Required authorization that triggers code compliance requirements
• Building Code: Regulations governing construction standards

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Professional Guidance on Code Upgrades

Understanding code requirements and navigating code upgrade coverage can be complex, especially during the stress of an insurance claim. As professional roof consultants, we help homeowners:

• Identify current code requirements for their roof replacement
• Document code compliance costs for insurance claims
• Separate standard replacement from code-required upgrades
• Communicate with adjusters about mandatory upgrades
• Ensure code upgrade coverage is properly claimed
• Coordinate with building departments for permit compliance

Worried about code upgrade costs in your roof replacement? Contact us today for a free consultation. We’ll assess what codes apply to your home, estimate potential upgrade costs, and help you determine if your insurance coverage is adequate to protect you from out-of-pocket expenses.