Typical residential property insurance policies offer:
- “Ordinance” or “Law” which provides coverage—typically a percentage of the policy limits—in the event that building codes, enacted after a structure was built, require additional features not contained in the covered structure at the time of loss. Policyholders who purchase replacement cost coverage may expect that upgrades required by law are included in the coverage purchased, but some policies exclude these increased costs of repair.
- “Additional Living Expense” pays the costs of living in a temporary location if a covered loss makes the damaged home unlivable. This could include hotel bills, rent, and other increased costs of living incurred while the home is being repaired or rebuilt. These benefits are usually subject to both time and monetary limitations.
If only part of a structure or its contents is to be repaired or replaced, issues arise if the repaired portion cannot blend with the remaining undamaged property. If repairs are obvious, they may diminish a property’s value. Although language varies with each particular policy, policyholders may have the right to demand that covered property is restored to a seamless pre-loss condition.