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Insuring an older home

INSURANCE - Home insurance is designed to bring a residence back to the condition it was in before the loss. If the home is not new, this brings up a situation the owner may not have considered.

For example, a house's roof is damaged in a fire. The insurance covers only the cost of rebuilding the roof to its previous condition. However, when obtaining the building permit, the contractor learns that building codes have changed since the house was built—the new code requires the use of heavier wood, perhaps, or different fastenings. Unless the planned work meets current building codes, no building permit can be issued. The homeowner, not the insurance company, will have to pay the cost of upgrading.

To avoid this situation, homeowner policies can include what is called "Ordinance or Law" coverage. This covers the additional cost of rebuilding to current codes if a home is damaged or destroyed. Check with your insurance agent for more information.