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Building Code Upgrade Coverage: The Homeowner’s Cheat Sheet:

When you purchase an insurance policy for your home, you should be aware that every year, your local Department of Housing passes laws to regulate the construction and layout of new buildings. Although this may seem like it won’t affect you, the truth is, these laws impact the way your home would be rebuilt in the event of an accident. The cost of compliance with new building regulations can be steep. For that reason, some homeowners insurance policies include a provision known as ‘building code upgrade coverage’.

Before we explain this form of coverage, let’s look more closely at building code regulations. Your local Department of Building and Safety creates new building code regulations to ensure that a structure can withstand all kinds of issues known to the department, such as earthquakes, water pressure problems, high winds, hail, and fire. What’s more, some cities require that new structures or renovated buildings be reinforced with sheer walls to make the structure stronger. Sheer walls are sheets of plywood that are fastened to the framing of the home in order to stabilize the whole building.

Other building code regulations create rules for energy use and encourage green, alternative energy sources. To support this goal, some cities are required to install different lighting and windows in order to use less electricity and gas. Others require an automatic gas shutoff valve to prevent the harmful release of gas in the event of an earthquake.

As you can imagine, the cost of these upgrades may be substantial. Without building code upgrade coverage, that burden falls to the homeowner. To ensure you’re fully protected, we recommend that you speak to your insurance agent to see if code upgrade coverage is available. Before you purchase this coverage, be sure to determine how it is defined and how it will affect your monthly premiums. From this point, you’ll need to make an educated decision about how much building code upgrade coverage you’d like to buy to eliminate the risk of a gap in funds after a major accident.

Lastly, it’s important to note that after a loss, building code upgrade coverage does not pay out automatically. In order to collect those funds, most insurance companies will request the city inspector to demand code upgrades in writing. To do this, you’ll need to file a construction permit, get the inspector to come and write corrections to existing plans, obtain an estimate from a contractor to execute the changes, and supply that information to your insurance provider.

If you have any additional questions about building code upgrade coverage, do not hesitate to reach out! Our adjusters would be happy to discuss this coverage with you. Thanks for reading!

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