September 25, 2017

Bylaw Coverage Explained Simply: How to Protect Yourself from Out of Pocket Expenses

Light and dark brown rancher home with a two-car garage, white shutters and a manicured lawn.

One of the most frustrating things for a policyholder to experience is unexpected costs that can occur in addition to a direct damage loss. When a loss occurs, you expect to pay a deductible and receive full coverage.

We see more and more claims where policyholders become responsible for additional costs related to bylaw coverage. You may be able to prevent this frustration by asking your insurance broker about contingent building bylaw coverage.

What is Contingent Building Bylaw Coverage?

Contingent building bylaw coverage protects you from any increase in the cost of repairing or rebuilding your home after a loss as a result of enforcement of the minimum requirements of any bylaw, regulation, ordinance or law which regulates such repairs.

Simply put, the enhancement protects you by covering additional work to bring the structure up to current building code. It also covers both the demolition and removal of any undamaged portion of the building. Of course, there may be some restrictions, so it is best to talk with your broker to confirm.

It is beneficial to add this coverage to any insurance package for older homes and homes that have undergone renovations.


City Bylaws Change

Municipalities in both urban and suburban areas change bylaws to protect citizens and buildings from disaster. Why do municipalities change their bylaws?

  • New Safety Standards such as sprinkler systems, carbon monoxide monitors, and flame retardant panels protect people and property.
  • Updated Best Practices such as hard-wired smoke alarms versus traditional battery-operated alarms that increase safety for occupants.
  • Changing Features of cities and towns. For example, the city now requires underground electrical connections to service the house.
  • Homes are Aging. Many Canadians do not live in newly built homes. As homes age and municipalities continue to update and create bylaws to protect people, it affects how much work will need to be done to a home if a loss occurs.

How Bylaw Coverage Protects You

In summary, if a partial loss occurs, the municipality requires that the repairs to a home comply with new bylaws. Those repairs can be costly. You could potentially be out of pocket for those costs because most insurance contracts exclude coverage for losses arising from bylaws affecting repair or reconstruction of a damaged building. As noted above, you may be able to prevent this frustration by talking with your broker about contingent building bylaw coverage.

Mutual Fire Insurance offers a homeowner’s combination package. For one low cost, qualifying policyholders will receive coverage for Guaranteed Replacement Cost, Single Limit, Contingent Building Bylaws, Sewer Backup, and Enhanced Special Limits. Chat with a broker about contingent building bylaw coverage in over 500 offices in cities and towns from British Columbia to Manitoba.

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