The gap between restoring and rebuilding

Insurance generally pays to put a house back to its condition before the loss. When a damaged section of an older home is rebuilt, though, the building permit may require current standards for wiring, smoke and carbon monoxide alarms, framing, egress windows, stairs or energy rules. Those requirements can add cost that a basic repair estimate does not cover.

Ordinance or law coverage, sometimes called building code upgrade coverage, is designed for that gap. Some homeowners policies include a modest amount automatically; others offer it as an endorsement, and limits vary widely. In older houses with original wiring, narrow stairs or undersized openings, the difference between a small limit and an adequate one can be significant.

Code requirements depend on the scope of work and the city's current adopted codes. Denver's Community Planning and Development department handles building permits and can explain what a particular scope triggers. Do not assume that a small repair means no upgrades, or that a big repair means everything must change.

Terms to find in your policy

Ordinance or law
Extra cost to comply with codes when repairing covered damage
Limit
Often expressed as a percentage of dwelling coverage
Demolition cost
Some forms cover tearing out undamaged parts that code requires removing
Increased cost of construction
The added cost of building to current standards

Upgrades that commonly come up in older homes

Area
Electrical
Possible requirement
New circuits, grounding, arc-fault or GFCI protection
Why older homes are affected
Original knob-and-tube or ungrounded wiring
Area
Alarms
Possible requirement
Interconnected smoke and CO alarms
Why older homes are affected
Older homes may have none or battery-only units
Area
Framing
Possible requirement
Fire blocking, revised joist or header sizing
Why older homes are affected
Balloon framing and older spans
Area
Openings
Possible requirement
Egress windows in basement bedrooms
Why older homes are affected
Finished basements built without them
Area
Insulation and energy
Possible requirement
Current insulation levels where walls are opened
Why older homes are affected
Many old walls are uninsulated

Whether each applies depends on the permit scope; ask the city and your contractor.

Questions for the adjuster

  1. Does my policy include ordinance or law coverage, and what is the limit?
  2. How do you want code-required items separated in the estimate?
  3. Is payment for upgrades made only once the work is completed?
  4. If a required upgrade affects undamaged parts of the house, is that covered?
  5. What documentation from the city or contractor do you need?

General information for Park Hill, not a quote or professional advice. In an emergency, call 911.