What is home insurance building code coverage?

Building code coverage is a protection you may be able to add onto a homeowners insurance policy to help cover the additional cost of repairing your home up to code if it’s damaged by a covered peril.

While dwelling coverage, which helps protect your home’s physical structure, is part of a standard homeowners insurance policy, building code coverage is typically optional. But if your home isn't up to the latest building codes, you may want to consider adding building code coverage to your policy.

Suppose, for instance, your home is damaged by a fire. A typical homeowners insurance policy provides dwelling coverage to help repair your home's existing structure to its original state. But if your home isn't up to current building codes when it is damaged, you'll likely have to pay the difference out of pocket if you're required to repair or rebuild your home to the latest building codes, the Insurance Information Institute (III) says.

That's where building code coverage may help. If you purchase this optional coverage, it may help pay the additional cost to repair damage to your home up to today's building codes, as set by local building codes, the III says. You'll likely find building codes are in place for aspects of your home such as electrical wiring, plumbing and insulation. When repairs are done, a building inspector will typically check to ensure the work is up to code.

You'll typically find that you aren't required to bring your home up to code routinely. However, if you undertake a home improvement project, you'll likely be required to complete the work to the latest building codes.

Building code coverage typically does not help with the cost of routine maintenance or home improvement projects. That means it will not cover the cost if you decide to upgrade your plumbing or install more insulation. However, building code coverage may help pay for those expenses if the work is necessary as the result of damage from a peril covered by your homeowners insurance policy.

You can typically choose the amount of building code coverage you add to your policy. It's important to keep in mind that your policy will only pay up to the maximum amount of coverage you purchase. This amount is often referred to as a coverage limit. Your agent can tell you what coverage amounts are available to you.

Your agent can explain your options for protecting your home's structure - and infrastructure - so you can choose the coverage you need to help you repair your home to meet current codes if it's damaged by a covered peril.