By-Law Coverage: A Smart Move for your Home Insurance Policy
“In for a penny, in for a pound” is the old English proverb that has typically meant that once you begin something, you might as well see it through to completion, even if it becomes more difficult or costly along the way.
In the modern era, however, it’s also come to mean something slightly different — that, sometimes, the full cost of an endeavour isn’t known until you’re committed. And to many homeowners, that idea can resonate painfully.
The most obvious example? The renovation that was expected to cost ‘A’, but ends up costing ‘A+B+C’. It’s home ownership in a nutshell; everything seems end up costing more than initially planned, but it’s usually too late to change lanes. (Hey, at least you’re building equity!)
From an insurance perspective, the penny-to-pound analogy can take on a slightly different meaning, especially as it relates to older homes. Insurance brokers understand that, due to the unique financial risk posed by older homes to their homeowners, increasing bylaw coverage is often recommended.
Almost all home insurance policies include special clauses and a basic level of coverage for changes to the building codes in your hometown which determine how all structures, including detached and semi-detached houses, townhouses and apartment buildings, and all types of commercial buildings, may be built.
These codes are typically enforced through municipal bylaws, and can change relatively frequently compared to the age of a house; bylaws may even change a few times within your tenure in your home.
For example, in the City of Vancouver, revisions to building and plumbing codes were updated in 2014, and then again in 2019. The substance of bylaw changes have included new and updated compliance requirements related to construction on sloped sites, interior sprinklers, doorway and corridor widths for wheelchair accommodation, and even insulation. The unexpected need to meet any one of these new bylaw requirements could result in thousands, or even tens of thousands of dollars of additional costs that would not be covered through a standard policy.
The truly unfortunate aspect of changes to bylaws? Like most people, it’s likely you won’t find out about any changes to your local bylaws unless you have to make an insurance claim. And if you only have the basic coverage that may come with your insurance policy by default, there’s a chance that, in the event of a claim, covering the excess costs of repairing or rebuilding your will hit you directly, and hard, in your own wallet.
Here’s a typical scenario — there’s an event, such as a flood, fire, or storm, which results in sufficient damage to your home that a full or partial rebuild is required. As a result of reviewing the claim with your insurer, it’s determined that due to the age of your home and its construction (or, perhaps, as a result of its last renovation), combined with subsequent updates to your local building bylaws, more extensive work is now required in order for it to adhere to the current building codes.
If your basic policy includes $50,000 of by-law coverage by default, and the additional costs to bring your home up to code — not including the primary costs of the original claim — is $150,000, you would be required to personally pay the excess $100,000 to bring your home up to code.
It’s a potentially painful reminder of the downside of houses built in earlier generations, that alongside the value of classic architectural design and character features, challenges not seen in newer homes are often part of the package. It is truly not unusual to find older homes that do not meet current municipal building standards, and with any prospect of future claims that may require extensive remediation, repair, or reconstruction, comes the possibility that you may be unable to avoid dealing with these challenges head on. (Reminding us of the ‘in for a penny, in for a pound’ dilemma…)
So, once you’ve invested in something as significant as a house, it makes a lot of sense to ensure that you’ve tailored your insurance to its specific needs, even if it means spending a little extra today. As with any insurance, it simply means avoiding major expenses later, and with older homes this is something very real to consider.
Adding on Bylaw Coverage to your home insurance policy provides that extra risk protection, ensuring your home can be repaired or rebuilt to the latest standards in your local jurisdiction, whether related to modern building materials, the latest accessibility and safety standards, or even demolishing entire structures that, as a result of some other damaging event, have revealed themselves to be a greater issue than you ever would have known when you purchased your home.
Bylaw coverage ultimately provides greater financial security to anyone considering the purchase of an older home, and for those considering staying in their home for a decade or more.
If you want to avoid any risk having to pay out of pocket for the unexpected, additional costs of repairing or rebuilding property to new standards required by law — whether such repairs or rebuilding are the direct result of the unfortunate event, or simply discovered as a result of the event — Bylaw Coverage is the solution.
Bylaw coverage can be purchased by way of endorsement to your existing home insurance policy, or as a separate, add-on policy – ask us today about how to protect your character home from the unexpected!