How Building Codes Affect Insurance Claims

How Building Codes Affect Insurance Claims

Do you live in Northern Vermont or New Hampshire? If so, chances are you probably own an older home. In fact, the average age of a home in the Derby, Vermont area is approximately 51 years old – more than a decade older than the average age of Vermont residents.

Though rich in history and embedded with personal significance, your older home likely does not comply with current building codes and ordinances. And while the age of your home might never be a problem, it will likely pose some serious challenges if and when you have to file an insurance claim. That’s why it’s important to have ordinance coverage or law coverage as part of your homeowners policy.

Building Codes: What, Why, and How

In order to better understand the significance of Ordinance or Law coverage, and why it is beneficial to your policy, it’s helpful to know what building codes are, why they exist, and how they work.

  • What: Building codes are a set of regulations that dictate how a structure must be designed, constructed, altered, and maintained.These codes define only the minimum requirements a building needs to assure the safety, health, and welfare of occupants.
  • Why: Building codes are important for several reasons, namely for your own personal safety, as well as the safety of your family and any guests in your home. These codes are also important in preventing the spread of dangers such as fire or disease, and they help to conserve energy.
  • How: Building codes have been around for hundreds of years and continue to evolve with modern technology, new construction techniques, and advancing building methods. For them to work, however, both homeowners and building officials must all understand and comply with the building codes.

Ordinance or Law Coverage: What, Why, and How

Insurance companies have developed ordinance or law coverage policies that help cover the costs of repair expenses due to new building codes. Similar to building codes, understanding ordinance coverage is much easier when you know what it is, why it’s important, and how it works.

  • What: Ordinance coverage is an additional feature of a homeowners policy that helps to cover the costs of repairing a damaged building in order for it to comply with updated building codes. Often times fixing extensive property damage while also ensuring the construction is up to code standards can be a costly venture. But by purchasing ordinance coverage, you can have financial assistance in paying these costs.
  • Why: After some time, the building codes that once considered your home safe become outdated. If your home is damaged to the point it requires construction, your local government will require that all additions and reconstructions comply with current building codes. In many cases, this modern reconstruction costs more than your standard homeowners policy can cover, which is why it’s important to have the added security of ordinance coverage.
  • How: Ordinance coverage works by helping your pay for demolition costs, loss of value costs, and/or increased construction costs. For example, say 70% of your home was damaged by a fire. Local building codes state that when more than half of your home is destroyed, the entire structure must be demolished and rebuilt. Your homeowners policy will only cover the 70% that was damaged. Thankfully, your ordinance policy will cover the costs of tearing down the remaining 30% and rebuilding your entire home.

Find out how you can better protect your older home with a reliable homeowners policy and ordinance or law coverage by visiting the Taylor-Moore Agency. As the leading insurance company in Vermont and New Hampshire, Taylor-Moore understands the wants and needs of North Eastern residents and offers competitive pricing for home insurance policies, auto insurance and much more. Call us today to get started.

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