Why property owners must check their coverage for code compliance
There are a lot of types of hidden damage after a fire, flood, or other disasters. Moisture from a burst frozen pipe can lead to hazardous mold in the walls. Airborne soot can travel anywhere in your home during a fire. One important role for a public adjuster is finding this hidden damage and making sure your insurance company reimburses you fairly for it.
There’s another hidden cost that is often invisible to property owners: code compliance.
Standard coverage for code upgrades is insufficient
How does it work? Take, for example, a modest rental property with 6 units that’s about 100 years old—you can find several like this in most cities. An accident leads to a $400,000 fire. Fortunately, the property owners are prepared and have great coverage for fire-related repairs. They hire a contractor to begin work, the contractor pulls the necessary permits and — surprise! — the city requires them to bring their building up to current code standards.
Now the property owners are on the phone with their insurance carrier. If they are like many policyholders, their insurance contract specifies a certain amount of coverage for code compliance—often 10% of their total coverage. If our hypothetical owners carry $500,000 in coverage, they will have $50,000 coverage for code-related upgrades that could easily cost upwards of $150,000.
Code compliance is also an issue for property owners who face a total loss. In one Colorado city where several homes were destroyed in a fire, homeowners found that new codes requiring higher standards for energy efficiency could cost them an additional $20,000 to $100,000.
Assess your risk before changing your coverage
What’s the lesson? Review your insurance coverage ASAP.
Standard code coverage is commonly inadequate for meeting substantial code compliance upgrades. Depending on the age, condition, and location of your property, standard code coverage may be enough. Especially if you have an older property, find out the types of upgrades you could be required to make while restoring a property after significant damage, depending on the codes in your area. You may find that the risk you incur will make building code upgrade coverage well worth it.
There are as many possible compliance gaps are there are communities that establish building codes, but these are some common areas to consider:
- HVAC systems
- Electrical and plumbing systems
- Insulation and asbestos abatement
- Sprinklers and fire alarm systems
- Grade of building materials, such as shingles
That list is far from exhaustive, however. In the Colorado community affected by wildfire, codes included requirements for energy star appliances, efficient water heaters and heat pumps, electric vehicle charging stations, and the ability to support solar panels. Make sure you know the codes for your area when you assess your risk.
Don’t go it alone
When you have questions about the reimbursement your insurance carrier is proposing after a disaster, you need someone who is on your side. When you hire a public adjuster, their only concern is getting the best settlement for you. Whether or not code upgrades are part of your claim, the process can be long and time consuming. A public adjuster follows your claim from beginning to end, while you focus on getting back to your life.
The best time to call a public adjuster is immediately after property damage, even before you start to clean up. If you’re one of the many who didn’t learn why so many property owners work with a public adjuster until they have a problem with the insurer, don’t worry—it’s not too late to get help.
If you experience a house fire or other disaster, calling a public adjuster right away is the best way to be sure you get the settlement you deserve and recover from your losses. Grenier Public Adjusters has helped homeowners like you assess total damages, document lost possessions, and navigate the claims process for the best possible result while you focus on the demands of day-to-day life.