Building code changes can create extra expenses not covered by standard insurance. Be sure you’re protected.
Do you know how your home or other property complies with current building codes if you had to rebuild after a fire or other loss? If not, you’re not alone; however, it’s a real concern that you need to consider. Changes to building ordinances and laws can result in requirements to upgrade your building to new standards during reconstruction, which can result in extra expenses that may not be covered by a basic property insurance policy.
The MA Board of Building Regulations and Standards is continually working on changes to the building codes related to construction and energy standards. These changes as well as other local ordinances can become an issue when it comes to rebuilding especially after a significant loss.
Ordiance or Law Insurance covers extra expense not covered by a basic policy
Insurance policies only cover rebuilding to the condition prior to a loss, not betterments and upgrades. Even if you are diligent about making sure your property valuation and coverage limits are appropriate for replacement cost, most property policies only provide minimal coverage to address additional costs resulting from ordinance or law issues. To be protected, you need to purchase Ordinance or Law Insurance, which specifically covers such extra expenses including:
- Loss to the undamaged portion of the building
- Demolition and removal costs of undamaged portion of the building
- Increased costs of repair or reconstruction due to building code changes
For example, your building is 50% damaged in a fire. Your local building code may require that the undamaged portion of the building be demolished or that you update components of the undamaged structure to current building codes in order to rebuild. The demolition or upgrades to the undamaged portion of the building wouldn’t typically be covered by a standard policy, which only pays for repairs and replacement of the damaged portion of the building.
There are numerous other examples of situations where laws create extra expenses that will only be covered if you have the option of expanded Ordinance or Law Insurance added to your property policy. The age of your building may not be relevant, so don’t assume that just because your property was recently constructed, you don’t have to worry about ordinance or law situations.
To learn more about Ordinance and Law Insurance, please contact your Murphy Insurance Agency representative.