Unique insurance for older buildings

I spoke with a prospective client yesterday who revealed some valuable information I was unaware of regarding the insurance risk on older buildings. Buildings that are grandfathered in under older zoning laws, not required to come current to today’s code requirements. Here is what I learned.

There is fire insurance available for older buildings which include upgrading to current code requirements. Thus as in his case, when he experienced a fire of over 30% of his building he was required by the city to upgrade the building to current code requirements and this extra insurance he carried for just such a risk covered the costs of this upgrade. He explained to me the newer code requirements included additional bathrooms, wiring issues, and many other costly requirements.

It cost approximately $150,000 for him to bring the building up to current requirements and if he did not have this type of insurance he would have taken a huge loss, as he would not have been able to afford the rehab of the building and he would have lost it all together.

Just a word of warning to owners of old, out of code buildings. This type of insurance seems like a very good addition to a standard insurance all risk policy. Ask your agent about the cost, it may be worth it.