When fire, flood, or other damage to your home or property occurs that results in needing to rebuild, the reconstruction may need to comply with new bylaws. A property built in 1945 may have been subject to different zoning bylaws related to the building’s footprint, environmental impact, or many other factors. If these upgrades are not included in your insurance policy, you may be left with a shortfall between actual reconstruction costs and what your insurer is obligated or willing to pay.
Coverage enhancement or “bylaw” policies will cover these increases but will usually have a separate limit – and that limit can often be insufficient. It is therefore very important to make sure that you are aware of the potential bylaw-related reconstruction costs that will apply to your dwelling, and make sure you are adequately prepared in case of such an emergency.
Common modern bylaws or code upgrades include:
- Seismic upgrades, increasing the new building’s tolerance and resistance to earthquakes.
- Fire safety upgrades, including installation of sprinkler systems, use of fire-resistant building materials, and modern alarm systems.
- Accessibility upgrades, such as entrance ramps, elevators, sidewalks, additional parking, and lighting poles.
- Energy efficiency upgrades, such as insolation, windows, and HVAC systems. In a future post, we will discus the newly-legislated “Step 3” code to meet climate reduction goals. Importantly, these upgrades are required for even new homes built within the last ten years.
- Structural upgrades, including roofs, foundations, and retaining walls.
It is important to ask your insurer or broker about all of these exposures and the obtainable limits. These upgrades can be very costly. For example, Step 3 Code upgrades can cost more than $25 per square foot. Given that these upgrades will apply to even recent construction, many properties do not have adequate coverage.
While these upgrades are costly, having proper coverage and completing the installations can also be beneficial. The rebuilt property will have improved safety features, be less susceptible for future damage, may increase property values, will likely reduce maintenance costs, and help mitigate environmental impacts.
If you have questions about your coverage needs, or are suffering the consequences of inadequate coverage recommended by a broker, contact our team to see if we can assist you.
