Here at the coast, we all know that our homeowner’s insurance policy doesn’t cover flood damage. People need a flood insurance policy to cover flood damage. What about flood compliance?
If a structure has been burned, damaged by a tornado, and suffered wind damaged and water damage from rain, a homeowner’s insurance policy may help the rebuilding more broadly than we generally think. Most know that the homeowner policy will pay to repair the house to the original condition. What is less known is that there is an additional coverage in many homeowner policies that will help with code compliance for damaged structures, not just putting the structure back to the original condition.
Commercial and homeowner’s policies may have options for “Ordinance and Law Coverage” that will pay for some or all of the new code requirements put in place since the original structure was built. This is an additional coverage that is usually purchased separate from the standard policy adding 10% to 20% of the base policy coverage to cover additional legal requirements when rebuilding.
In Terrebonne Parish, structures that are damaged by any cause to at least 50% of the assessor’s value of the structure are deemed to be “substantially damaged.” A substantially damaged home in the Special Flood Hazard Area would be required to meet current flood requirements. Outside the Special Flood Hazard Area, the plumbing code now requires that structures be built 18 inches above the centerline of the road to ensure that sewerage treatment functions properly. This could be triggered by a substantial damage designation as well. This may be covered by a Law and Ordinance endorsement.
Ordinance and Law Coverage may be available on the homeowner policy to pay for coming into compliance with this ordinance if the insurance policy is paying for a covered loss as well. It wouldn’t be available after a flood if that was the only insurance claim from an event, but it might help elevate the structure after a fire or wind event.
Ask your insurance agent if your policy has, or could have, a Law and Ordinance endorsement.
Parish staff are not insurance professionals and all questions should be directed to an insurance agent.
1 - The Parish uses the assessor’s database value to determine whether a structure is over 50% damaged, but people can bring an appraisal to refute that value.