Is your homeowners policy up to code?

rolled up blueprints, ruler

Building codes are established to protect us as safety standards and construction materials improve. If your home was built early in the last century, you will probably need to address building ordinance upgrades should you incur a significant loss to your home. Even if your home was built 15 years ago, chances are good that you also will be faced with substantial building code changes, including energy standards, fire sprinkler systems and roofs.

According to the Federal Emergency Management Agency (FEMA)1, most states and local jurisdictions adopt the International Code Council (ICC) building codes. They include a set of codes for new residential construction (IRC) and a set of codes that apply when structures are altered, repaired or after a change in occupancy (IEBC). The ICC typically publishes new editions every 3 years.

Many insurance policies will cover only the costs to rebuild the home back to its previous condition prior to loss, or will cover only the costs to rebuild the damaged portion of the home. If your home is over 50% destroyed, your local city or government could require you to demolish the entire home to rebuild it to current building codes. You could be responsible for the costs to demolish and rebuild the remaining portion of the home.

When selecting insurance coverage, it’s important to plan for the unexpected to help ensure you will be protected should the worst happen to you and your family. Many insurance companies limit how much they cover for code upgrade costs. Make sure your homeowners insurance policy includes ample building ordinance and law coverage.

How Nationwide® Private Client responds

With the Nationwide Private Client homeowners policy, you are covered up to 100% of the dwelling coverage limit for the additional costs incurred to rebuild in compliance with the required building ordinance and law upgrades.2 With our protection endorsement, this coverage amount is unlimited for dwellings and other structures.3 Coverage includes demolition costs for the undamaged portion of your home should your local jurisdiction require you to rebuild your entire home when a covered loss damages more than 50% of the insured replacement cost of the structure.4

How you may be at risk

Consider these scenarios: A fire breaks out out in your kitchen due to old wiring, damaging more than half of your $1 million home. Your architect advises you that the county you live in requires you to demolish the undamaged portion of your home to rebuild it entirely to comply with today’s building codes and regulations. Wiring upgrades will cost $40,000, and demolition of the undamaged portion of the home will cost even more. Are you covered?

A pipe breaks in the attic of your 5,000-square-foot home while you are away on vacation, resulting in severe water damage. In the process of reconstructing your home, you discover that among other building code requirements, you have to install a fire sprinkler system, which will cost $10,000. That’s in addition to the other code upgrade costs and the cost of rebuilding your home to match its original unique features. Are you covered?

A tree falls and takes out a huge portion of your house. Reconstruction of the damaged portion will cost more than 50% of the insured replacement cost of the structure. City authorities are requiring you to tear down the standing portion of your home to rebuild it entirely to code, which includes upgrades to roofing materials and energy-efficient windows. Are you covered?

A fire destroys your $2 million home, which sits on 2 acres of land. To make matters worse, in order to comply with fire prevention and loss reduction setback laws, your home has to be moved 6 feet to ensure it is at least 30 feet away from your property line. Moving your home will cost as much as rebuilding it to its original state. Are you covered?

Why it’s important for you

If you do incur a significant loss to your home, it’s important to be prepared. Talk to your agent about whether or not you are adequately protected for building ordinance and law coverage to help shield you from the unexpected increased costs of rebuilding your home to code.

Nationwide Private Client offers these added benefits:

  • Deductible waiver: Your homeowners deductible will be waived for a covered total loss.5 With our protection endorsement, deductibles up to $25,000 are waived for a covered loss over $50,000.5
  • Loss of use: We know it takes time to rebuild. If you are required to leave your home during reconstruction, we include loss of use coverage to pay for the increase in your normal living expenses necessary to maintain your standard of living for the reasonable amount of time required to restore your home to a habitable condition — with no dollar limit or deductible.3
  • Realty tax assessment increase: With our protection endorsement, we will pay up to $25,000 for any additional county tax assessments the first year after your home is rebuilt, when they are increased due to a covered loss.6
  • Mortgage expense: Pays up to $5,000 per month and $50,000 total for your increased mortgage payments when the increase is due to a total loss.3
[1] "Seismic Building Codes," (April 9, 2022).
[2] The damaged or destroyed building structure must be repaired or replaced at the residence premises. Other limitations and exclusions apply
[3] Coverages and limits may vary by state. Other limitations and exclusions may apply.
[4] Less any ordinance or law expenses
[5] Unless a special deductible applies. Does not apply to losses caused by seepage and leakage of water not related to weather, unless an automatic water shutoff device is active at the time of loss. In CA, does not apply if cause of loss is wildfire or brush fire. In some states, applies to deductibles up to $50,000.
[6] May not be available in all counties. Please consult your county tax assessor.