Rebuilding to Code After a Loss

By November 8, 2018 Premier Insurance

What did the Great Chicago Fire of 1871, the San Francisco Earthquake of 1906, and Hurricane Andrew in 1992 all have in common? We can guarantee that 2018 Hurricane Michael will join this group of historical events that all influenced the change to building ordinances in the effort to preserve human life and property.

While preservation is the primary reason for updating building codes and ordinances, additional items including energy efficient rating systems and preservation of historic properties inevitably make their way into code. Renovation or repair of a protected historic home presents its own unique challenges by requiring specific materials and plan approval. Location, such as Laguna Beach, can require changes in layout and story height to enhance, protect, or preserve the view.

For the most part, everything I have pointed out seems reasonable. In fact, if your home suffered a property loss from fire, water, or even a hurricane you may welcome some of these upgrades and appreciate fortifying your home. There is only one potential insurance problem and the good news is that by working with a trusted advisor, you can eliminate the risk of any out of pocket expenses for compliance with an ordinance or law that stems from a covered insurance claim.

Most insurance policies limit the amount of coverage available under Ordinance or Law to just 10% of the Dwelling Limit including the removal of debris. Even a few carriers exclude coverage for compliance after suffering a loss entirely. At best, most homes covered for two million dollars, will only have $200,000 of coverage for compliance with the current building code.

Premier insurance policies more specifically cover the necessary cost to comply with any law or ordinance regulating construction, demolition, remodeling, renovation, and repair of covered property damaged by a covered loss. This coverage includes the undamaged portion of the home. For example, if you suffer a 50% loss from fire to a guest suite built over your attached garage, the city inspector may require full demolition and reconstruction of the addition to comply with local ordinance. This could even include replacement of the roof over the entire home, including areas undamaged, to comply with a wind or energy efficient rating.  Often time’s additional fasteners and a secondary waterproofing are required in coastal areas. Additional items may include upgraded skylights, electrical, insulation, and siding. Depending on the Dwelling Limit, 10% will likely not cover this illustrated loss.

Working with a trusted independent insurance advisor who specializes in premier insurance coverage can minimize or eliminate your exposure to unforeseen risks.  Consider getting in touch with Sterling Coverage today for your complimentary insurance review.