I’m negotiating with my insurance company on code upgrade charges. We lost our home in the 2017 Tubbs Fire in California. My original house was built in the ’70s and remodeled in mid ’80s. Our rebuild permit was issued in 2019. What portion increase (percentage if any) should the following categories have on code upgrade? Architectural Fees, GeoTech Soils Engineer, Structural Engineering Fees, Cal Green/Title 24 Consulting, and Permit/Fees?
Code is for the increased cost of construction or ordinance and law. If your policy has a code and ordinance, it will be listed on your declaration page. Sometimes there are endorsements with your policy that indicate if additional coverage is available. If you have incurred the cost for any of these items just submit them for out-of-pocket expenses and they will pay up to the limits on the policy. Code can also be used for the increase cost of debris removal. Most ordinance and code upgrades are 10-20 percent of the dwelling coverage.
It is important to understand there are four types of code coverage:
(1) coverage for the damaged area,
(2) coverage for the undamaged area,
(3) coverage to install an item required by code that never existed
(4) coverage to replace an item that is not coded compliant with an item that is code compliant.
Policies that include code coverage will provide coverage for rebuilding, repair, and restoration. When your architect prepares the drawings, he will identify what code requirements are needed. Typically, code upgrades are paid only if they are triggered by a covered peril.
Once the code is determined and what is required for the rebuild, then the contractor needs to prepare a change order to explain the code work and cost. Most of the time, this becomes an incurred cost to you before your carrier would reimburse you back for the expense. As far as fees for an engineer, architectural, and permit you can submit them for reimbursement as you incur them. Your carrier will only pay the policy limits for ordinance and code.