Loss Recovery and Changes in Building Code
You’re likely to have suffered severe property damage and large losses after a natural disaster. The “aftershock” of a natural disaster is often the increased costs of rebuilding according to the most recent building codes.
Unless you have purchased an Endorsement for your policy, which is called either:
- “Increased cost of construction” (with NFIP & flood policies) OR
- “Ordinance of Law” (possibly in your TWIA and certainly) with your Homeowner insurance
Your Insurance Company’s agreement is to “… cover the cost of restoring you to the same state you were before. It would not be to place you back, as the Building Department requires that your building be put back (reconstructed).
This Endorsement will not protect you from “tough luck”. Your Building Department will make an estimate and determine if your Structure has been damaged beyond 50% of its “assessed worth”. You will then need to bring your entire Structure up to code. Your Insurance Company won’t pay for code changes.
UNLESS, YOU HAVE BOUGHT ONE OF THESE Endorsements. This would cover this expense …. as long as the Endorsement you bought does not exceed the Structure limit.
You can only purchase a maximum amount of $30,000.00 with Flood and NFIP policies. It doesn’t matter what your Structure limit is. This Endorsement can be purchased with other policies than NFIP or Flood. It is only available in amounts equal to a percentage of your Structure limit. This Endorsement can usually be purchased in the following percentages: 10% to 25%, 50% to 100%, and 50% to 50%.
This endorsement will likely only be 10% of the Structure’s limit if it came with your policy or comes with a future purchase policy. This expense is very costly, especially if it is out of your budget.
To determine the percentage of the Endorsement to buy, it is a good idea to use the numbers in the available percentages (10%, 25% and 50%) as the MAXIMUM NUMBER of years for which this percentage will suffice or be very close. If your home is less than 10 years old, then 10% should be enough. If your home is between 10-25 years old, you should consider 25%.
If your home is between 25- 50 years old, 50% should cover most of the uncovered costs.
If your home is more than 50 years old, you can purchase 100% Endorsement coverage. My policy includes 100% Endorsement (Ordinance or Law) since my home was built in 1958. This adds up to about $125.00-150.00 each year with my Homeowner policy, and $50.00 with my NFIP insurance. My home state’s wind coverage is covered by our Homeowner policy. I don’t have to purchase the Endorsement.
These are just a few areas where it is common to need to update the structural building code:
- Wiring Updates and Electrical Services: Your structure may now have different needs than it did when you built it.
- Wiring protection and wire material Updated building codes may affect the types of wire, protection, wrapping, shielding, and protection.
- Framing Materials. There are many types of wood (e.g. 2×4’s, 6’s, etc.) that can be found in the walls and roofs.
- HVAC Equipment. The efficiency, location and requirements of the weather may have changed.
- Access for Handicapped Persons
- Ramps and doorways Most likely, codes for handicap accessibility have been updated.
- Kitchen and bathroom. These areas might have updated fixtures that provide greater accessibility and assist for those with disabilities.
- Updates on Water Systems and Plumbing
- Plumbing and Sprinkler Systems. You may have different metals, shut off valves, pressure loads and other components now than when you built your structure.
- Hurricane Preparedness Code Updates
- Exterior doors and windows Major damage can be caused by wind and water entering a commercial or residential building. Codes and regulations are required for bracing and strengthening windows, doors, and garage doors.
- The Roof. The Roof. A variety of roof shapes and structures have been frequently updated. Gable roofs are shaped like an “A”, which absorbs a lot of storm energy. They may also have specific strengthening requirements or restrictions when being rebuilt.
It is very difficult to recover insurance from an insurer who does not conform to the most recent building codes.
Here are some tips to get the most out of your claims recovery process
- Document everything. You should record all conversations, dates, calls, and so on.
- For any information regarding how to maximize your insurance claim, get to know and utilize your local and state Insurance Departments and Consumer Affairs Divisions.
- You should ask the Insurance Department to investigate any contractor, Insurer, Agent or Adjuster who is engaging in unfair practices.
- Learn about any special commissions and emergency task force units to see how they can help.
- Keep in mind that a letter written and sent properly can sometimes give you more power then you think.
- Ask for multiple quotes from licensed contractors. Describe how you want those quotes to be broken down.
