Having a house has its own set of rewards. As a humble homeowner, you naturally want your house to feel more like home. After a while, home improvement projects may begin to pile up. Let’s say you decide to put your DIY capabilities to the test and build your own back porch oasis. Problem is, you don’t have a permit.
Will your claim be approved if something happens that merits a call to your insurance company? Does homeowners insurance cover unpermitted work? The answer depends on a variety of factors, first let’s get into the basics of a building permit.
Regional townships and towns tend to put rules into place regarding building permits. The intention of a building permit is to keep both homeowners and communities safe. Despite this, building permits can pose problems for homeowners. Not only can permits be costly should you choose to do work on your own, but it isn’t uncommon for homeowners to discover that contractor work had been performed without an adequate permit. Unpermitted work might not seem like a big deal, but it can lend itself to major issues down the road, especially when it comes to homeowners insurance.
In this article, we’ll talk about why that is, and what you can do to prevent paying out of pocket for costly errors. We’ll even get into the steps you should take when you discover your house contains unpermitted structures.
Does Homeowners Insurance Cover Unpermitted Work?
Unpermitted work makes everything more complicated than it needs to be. On top of making your home ironically less valuable, insurance companies are much less likely to approve your claim in this situation.
On the flip side, if you buy a home that has unpermitted work unbeknownst to you, a claim is a little more likely to be approved. In many cases, however, you’ll be dropped from that insurer afterward.
Let’s pretend that you had an addition put onto your home by a local contractor. Later on, you find out that the contractor was not working with a permit. Faulty wiring, in addition, causes a hypothetical fire. Are you covered by homeowners insurance? Generally speaking, unpermitted work is not covered by your homeowners insurance. In fact, unpermitted work can interfere with your home insurance as a whole.
If you file a claim with your homeowners and they find out that you’re having unpermitted work performed on your property, they do have the right to drop your coverage due to risk. What can be done if you’ve had unpermitted work done in the past and it is interfering with insurance? You’ll need to remediate. Homeowners can avoid problems with insurance will need to remediate to ensure that the home is fully protected. Keep in mind, you can choose to remediate at any time.
Not sure what remediation entails? Let’s investigate.
Remediation for unpermitted work
With a 50/50 chance of purchasing a house with unpermitted work, you’re likely to be living in one now. What do you do when you discover that additions to your home were executed without permits?
If you want any future insurance claims to pull through, you’ll need to remedy your unpermitted problem immediately. Unfortunately, it will take some extra time and money.
Remediation for unpermitted work means tearing upon the unpermitted work to allow inspectors to see that the work has been done to code. In a home with a new addition, inspectors will need to investigate and ensure that wiring has been done properly and that everything is up to standard. If aspects of the job have not been done properly, it will need to be repaired before the local inspector can approve the work. The process itself can be quite expensive and lengthy. Permits must be purchased and any work previously performed in the home will need to be deconstructed. Unfortunately, if your homeowners coverage is in jeopardy or you need to sell your home, remediation is your only option.
How to fix unpermitted work
First, you can call your community permit office and request remediation services. Remediation is just a fancy way of saying “reversing the damage done.” They can direct an inspector to your home to check for compliance and provide you with further information to stay up to code.
Next, you should notify your insurer and be transparent. Let them know that your home has unpermitted work and you’ll be going through a remediation process. Your insurance company may be able to cover the cost of any upgrades to bring your home into legal order.
From here, you can get your finances in order and choose a method of recovery. You can hire a licensed contractor of your choice. Another route is to have your city officials take care of these arrangements.
Doing things the right way has its challenges and rewards. After everything is said and done, you may have to spend out of pocket a little. Still, you’ll be safer, your property will be worth more, and your claims will be approved.
In the future, always check your local regulations when you want to make substantial changes to your home. Only hire licensed contractors and do your research for the best and most competent. Get with an inspector who can assess every part of the home you want to buy.
The difference between permitted and unpermitted work
Home additions and finished basements are among the most common types of work done to a house. These are both extensive projects that often require a permit to be legal.
Many real estate agents and professionals agree that all projects should be done with a permit. The fact remains that there are thousands of homes on the market right now with unpermitted work.
The biggest difference between permitted and unpermitted work is, easily enough, the permit. Plus, damage to permitted structures on your property will be covered by your standard homeowner’s insurance policy.
Still, let’s get into what truly defines a permitted or unpermitted structure.
Permitted
A building permit aims to ensure safety and compliance with code enforcement. Think of a permit as a seal of approval from your city. This is a big reason why insurance companies favor homeowners with permitted structures.
By holding builders to a certain standard in order to pass inspection, more homes are well-constructed, free of flaws, and structurally sound. All aspects that can decrease the risk of life-threatening hazards such as a fire. Generally speaking, the type of work that requires a permit can vary greatly from one community to another. For example, a building permit may be required for work that involves:
- Fencing
- Plumbing
- Decking
- Roofing
- Door or window installation
- HVAC
- Building construction
- Electrical box installation
- In-ground pool installation
- Interior remodeling projects
- Structural add-ons, like a shed, garage, or pool.
Some projects might not require a permit in your area. The type of work and community you live in may affect what is considered a legal structure.
Another varying factor is cost. Building permits can range from a few hundred to a few thousand dollars. Your total cost for permits ultimately depends on the extent of the project.
Unpermitted
Top real estate agents estimate that at least 40-50% of homes have had unpermitted work done. Suffice it to say, many homeowners opt for unpermitted work to save a buck.
The term unpermitted work can be used to describe any work done without the proper permits. This could describe alterations or construction performed by you or contractors.
Since you need a permit to make certain projects legal, unpermitted work is considered a liability. As such, insurance companies are likely to see you as negligent and won’t pay out for damage to these structures.
Some people may think hiring an unlicensed contractor is taking the easy way out. They’d be paying more for fees and repairs in the long run.
Conclusion
If you have to do it, it’s best to do it right. Taking the easy way out will cost you more money and hardships in the end. If something happens to an unpermitted part of your home, you may have to come out of pocket.
Insurance companies have a thing about maintenance. Allowing unpermitted structures to place impending doom on your home seems negligent to them. As such, you’re much better off hiring licensed professionals and remedying your unpermitted projects.
The question of unpermitted work comes up a lot on online forums, but it always seems to be with the addendum that it was poorly done and/or not to code.
My question is, what if no fault was found with the work and/or the cause of the fire was totally unrelated?