9 Things You Need to Know About Building Code Insurance
Building codes change frequently. Building code insurance helps cover the cost of staying up to code.
Also known as ordinance or law coverage, building code insurance covers additional costs you could incur during construction or demolition to keep your property up to code.
It’s easy to overlook building code insurance coverage. In fact, 80% of homeowners have never heard of building code insurance coverage, and many homeowners don’t understand the importance until it’s too late.
Today, we’re explaining everything you need to know about building code insurance coverage and how it works. Here are nine things you need to know about building code upgrade coverage.
How Building Code Upgrade Coverage Works
When you build or repair a property, your contractor’s work needs to be up to city, county and state codes.
Building code upgrade coverage covers the cost of building or repairing property to meet local building code standards.
An ordinary homeowners insurance policy may or may not repair or rebuild your house to code; instead, some standard homeowners insurance only covers the cost of restoring your home to its original state. Other policies cover a percentage of your total insurance or a flat fee for code upgrades. This wording is buried in your policy and often difficult for most people to locate or understand.
If your original home did not align with modern building codes, for example, and half of your home is destroyed in a house fire, then insurance only covers the cost of restoring the original home as it was. It doesn’t cover any additional costs you may incur to meet modern building codes.
To help offset this cost, many homeowners insurance companies offer building code upgrade coverage. If your policy has building code upgrade coverage, then your insurer agrees to cover the cost of repairing or restoring your home to match modern building codes. This pertains to the parts of your home that might not have been damaged, but still need to be upgraded to current code requirements.
Building Code Upgrade Coverage is Popular with Older Homes
If you purchased an older home, then building code upgrade coverage may be worth it. You can get policies with a building code endorsement that raise the standard coverage to a dollar amount that would cover the cost of the code upgrade for important items like electrical, plumbing and HVAC.
A 50-year old home was built during a much different time. Building codes were different. Builders used different materials and abided by different city or state regulations.
If your 50-year old home burns in a fire, then you may need to spend thousands of extra dollars to align your home with modern building codes. Without building code coverage, you would pay these costs out of pocket.
Building code upgrade coverage is less popular on newer homes. If your home was built in the last decade, for example, then building codes are less likely to have changed.
The older your house, the more valuable building coverage upgrade coverage can be.
When Does Building Code Upgrade Coverage Apply?
If your home is damaged or destroyed by a covered peril and you need to bring your home up to code during the repair or rebuild, then you can utilize your building code upgrade coverage.
A “covered peril” is anything that damages your home and is covered by your insurance policy. Fires, storm damage, damage from falling objects, and water damage, for example, are all common covered perils.
Let’s say half of your house is destroyed by a falling tree. Your insurer agrees to repair that side of your home to its original condition. However, that original condition doesn’t align with modern building codes. In this situation, you can use your building code upgrade coverage to cover the additional cost of meeting local building codes.
Building Code Upgrade Coverage Doesn’t Cover Renovations
You could encounter code issues when renovating your home. However, you cannot use building code upgrade coverage to cover renovations to your home.
Building code upgrade coverage only applies in situations where you need to bring your home up to code after a covered peril. If you’re voluntarily choosing to renovate your home and encounter issues with building codes, then you cannot make a claim through building code upgrade coverage.
How Much Does Building Code Upgrade Coverage Cost?
Building code upgrade coverage costs vary widely based on the age of your home, its value, local risk factors, and more.
Compare quotes from insurers in your area. Some insurers offer building code upgrade coverage, while others do not. Be sure to check your policy language for any existing coverage and then consider if you need additional coverage.
ome insurers offer building code upgrade coverage with a specific limit – such as $10,000. Others tie it to a percentage of your dwelling coverage – such as 15%.
Is My Home Up to Code?
Each city has a local inspection office. You can contact the local inspection office to determine if your home is up to code. A good rule of thumb is if your home is over 30 years old, you might need to have an electrical, plumbing and HVAC inspection to make sure that the home meets current building codes, and if it doesn’t, a quote to bring the items up to code in case of a covered peril.
Some homeowners hire a licensed professional to inspect their home before deciding if building code coverage is worth it.
Or, you may have encountered code-related issues during a home inspection, motivating you to add building code upgrade coverage.
Building Codes Change Regularly
Your house may have been built perfectly to code in 1990. However, building codes have changed over the last 30+ years, and your home may no longer be up to code.
Cities, states, and federal governments change building codes regularly. When building codes change, all new homes – including repaired or replaced homes – must abide by new building codes.
In many cases, building codes change after a natural disaster:
- The city of San Francisco modified its building codes extensively after the devastating 1906 earthquake and the resulting fires that swept the city. The new building codes required buildings to meet certain protective standards against earthquakes while also reducing fire risk.
- The 1993 Long Beach, 1971 San Fernando, and 1994 Northridge earthquakes in California, meanwhile, led to the introduction of new building codes to better protect against earthquakes.
- After the 2003 and 2007 southern California wildfires, new building codes were introduced to better protect homes.
- In other parts of the country, floods, hurricanes, and other natural disasters can all lead to significant upgrades of local building codes.
How Building Code Upgrade Coverage Works: An Example
Let’s say you live in a hurricane-prone region of the country.
Homes built in hurricane-prone areas must meet higher wind damage standards than homes built in other areas of the country. The structure of the home must be able to withstand a certain windspeed -say, in the event of a hurricane with 100 mph winds or higher.
Your home was built in 1960 and met code standards at the time. However, regulators have upgraded that code over the years based on what we know about hurricanes. Your home is no longer up to modern code standards.
If your home was damaged in a house fire, then you need to repair your home to modern wind speed standards.
Your insurer, however, only agreed to repair your home to its original condition.
If you have building code upgrade coverage, then your insurer will cover the cost of restoring your home to its original condition and adding anything else needed to meet modern codes.
If you don’t have building code upgrade coverage, then you’ll need to cover these additional costs out of pocket.
How Public Adjusters Help with Building Code Upgrade Coverage
Property damage insurance claims can be messy – especially when there’s a lot of money at stake or a dispute. Public adjusters can help.
ClaimsMate’s public adjusters specialize in solving tricky building code upgrade coverage disputes.
Contact ClaimsMate for a free consultation.
During the consultation, a ClaimsMate adjuster can help you decide the best path forward for your insurance claim.
Discover how a public adjuster could help speed up your claim and maximize payout today by scheduling a free consultation with ClaimsMate.