Do you need building code replacement insurance?
As property remediation specialists, we often encounter homeowners or property managers who are stuck with a bill that is made higher because of the need to upgrade the damaged home or building to bring it up to code.
What exactly is a code upgrade? Building codes are constantly changing. The code most people are familiar with is the change in code regulated by the Americans with Disabilities Act (ADA). This regulation makes it necessary to facilitate the use of the building by anyone with a handicap. That might mean installing ramps, elevators, handicapped accessible restrooms and other needs.
While most homes may not have to comply with the ADA, codes change all the time because of the advancements in engineering, technology and building materials. While many building codes are federally mandated, they may also change because of local regulation. Codes affect foundations, underground pipes and drains, excavations and grades. As a result of building codes, you may find that you have to pay more for HVAC, plumbing or electrical upgrades.
Standard costs vs code upgrades. A standard replacement cost insurance policy should pay for the cost to rebuild or repair your fire damaged home. However, it usually doesn’t pay for additional costs associated with building code upgrades. Here’s a good example. A fire damages a home significantly, though there is a good portion of the structure that is undamaged. The building codes is this area require that a home be demolished and completely replaced if the home is more than 50% damaged. Most standard replacement costs policies do not however cover the cost to demolish the home, remove the debris and rebuild any undamaged areas of the home. In this case, the homeowner is responsible for a significant amount of the rebuilding fee.
How often does a home rebuild require a code upgrade? It varies by area, but if your damaged home is 10 or more years old, the chances are you are going to have to comply with current building codes. This compliance may add substantial cost to the reconstruction. Property owners are not expected to update their property every time a new code is enacted; however, if the property needs to be rebuilt due to a disaster then it must meet the current regulations in place at the time of the loss – which can be extremely costly.
What can you do? We recommend that you call your home insurance agent or broker and find out if you have a building code upgrade endorsement on your policy. If you don’t, consider getting one added. Restoration 1 of West Denver believes that Building Code Upgrade coverage is crucial to a property owner’s recovery from a disaster.