A home is most people’s most valuable possession and protecting it properly with insurance should be critical to any homeowner. Most of the best NY homeowners insurance companies provide a good comprehensive package of coverages, but yet, even with good standard policies, important protections are often missed and these gaps in coverage can leave a homeowner exposed to significant loss for a small or moderate claim to severe financial pain in the event of a major loss. Below are some common gaps found in NY home policies.
Building Ordinance or Law Endorsement
The Building Ordinance or Law Endorsement, particularly important for older dwellings, is often not included on a policy or included at minimal limits. It relates to either a partial or total loss claim and covers additional costs to repair or rebuild due to local building code rules.
Relating to a partial loss, here’s one example, but keep in mind that building ordinance or law relates to many different types of claim scenarios. Say for instance you have a kitchen fire. Fire is a covered cause of loss on your policy so you’re good in that aspect. The fire burned into one of the kitchen walls and damaged some wiring. The town inspector inspects the damage and relays that a higher grade wire is now required per code and what’s more, the entire home needs to be rewired per the town ordinance. As the owner of the dwelling and without building ordinance coverage on your policy, you will be required to pay for the entire cost of the wire upgrade which is an expensive proposition.
As to a total loss scenario, let’s say a fire burns half of your home and the other half remains undamaged. Fire is a covered peril under your policy so the insurance company will pay to replace the damaged half of your home. But per the town code, if a dwelling is 50 percent destroyed, the entire building must be demolished before it can be rebuilt. In this instance, the homeowner would be responsible for paying out of pocket for 50 percent of the dwelling to be rebuilt. Talk about an expensive proposition, if it were to cost $500,000 to rebuild the home, the owner would be out $250,000!
Building Ordinance Coverage Limits
Some NY insurance companies do not offer this endorsement while others offer it at limits at 10, 25, and 50 percent of the dwelling limit carried on the policy. There are a select few that offer 100 percent of dwelling limit coverage.
For example, if you have 10 percent coverage and your home’s dwelling limit is at $400,000, you would be coverage for building ordinance added costs at up to $40,000. Where this might be an adequate amount of protection for a partial loss, it would not be adequate in a total loss scenario where half of the home is not covered by your insurance due to the town code requirements when 50 percent of the dwelling is destroyed and 50 percent is undamaged.
The following are some typical types of updates your home could need as it relates to your municipality’s up to date building code requirements:
New Fire safety updates
New wiring
New plumbing
New roofing
New means of egress
As you might imagine, building ordinance or law coverage is a vital part of any NY homeowners insurance policy carried at an adequate limit, especially for homes built prior to 2000.
You should check your coverage If you’re unsure whether you have this protection on your current policy or not. If you get a NY home insurance quote, it should specify whether or not it’s included and at what limit.
