A Critical Home Insurance Coverage Option You Want To Have
· by Matt Fox · posted March 17, 2008
· filed under Homeowner, Insurance Agents, Personal Insurance category.
A typical home insurance policy has many built in limitations on coverage. One is a limitation on rebuilding costs. A basic home insurance policy will pay, up to the policy limits, only the amount to repair or rebuild your home to its original condition. This does not take into account any additional rebuilding costs which would be required by changes in laws and building codes.
There is an endorsement to help protect against this additional cost. It’s call ordinance or law coverage. It may be called building ordinance, building code, or other similar name depending on the insurance company you’re using.
So, what’s the big deal?
Well, building codes change. . .Often. Since the increased cost is not covered in your base home insurance policy this optional coverage adds coverage for three common building law requirements: demolition of the undamaged portion of a building, the increased cost of construction required for superior materials, and cost to clear land of debris after demolition.
Here’s an example. Just over 50% of a home is destroyed from a fire (or any other covered loss, it doesn’t have to be just fire). The base policy would only pay to rebuild the damaged portion. Without this endorsement you would have to pay for:
- The cost to demolish the rest of the home, where required by law.
- The cost to clean up the land after demolition.
- The increased cost to rebuild with superior material because of changes in building codes (examples could be needing to add fire sprinklers, upgrade electrical wiring, upgrade plumbing, etc.).
This is an optional coverage. Don’t assume it’s in your policy. If you don’t see it on your policy declarations page, ask your agent why. If they don’t know what you’re talking about, it’s time to find another agent.
Comments
Got something to say?