The Oklahoma Insurance Department (OID) has received a number of complaints regarding claims for repairs to a damaged roof. A limited exception to the “Ordinance or Law Exclusion” in the HO-3 form provides “additional coverage” for an increase in repair costs “due to the enforcement of any law which requires or regulates the construction, demolition, remodeling, renovation or repair of a structure damaged by a peril insured against.” (Emphasis original).

Property insurers who offer or appear to offer this additional coverage may not condition the coverage “on the vagaries, inconsistencies and uncertainties of enforcement,” as doing so is equivalent to encouraging that covered damages be repaired in contravention of public safety laws. Offering “additional coverage” on a risk the insurer knows does not exist “constitutes the sale of illusory and unfairly discriminatory coverage.”

Insurers should consider “all building codes as being strictly enforced” whenever an insured’s property is being repaired under the exception for the enforcement of a construction regulation.