Building Permits & Homeowners Insurance

[shbeachbum]

My neighbor went to a tax meeting to discuss her recent re-evaluation. She was told that if she did improvements on her house w/o permits and something happened, the insurance co. would check with the township to see if permits were obtained. If none were, the insurance co. would not pay for repairs. That would also extend to future owners when they sell. Has anyone heard of this?

 

I and probably half the township has had work done (replacing water heaters, HVAC units, etc) w/o permits so are we now not insured if anything goes wrong? This is the first time I'm hearing of this.

 

If above is accurate, how does one go about correcting the situation?

[FISHNFOOL]

I have seen this problem first hand. My niehbor had a small add alevel done above his garage. He had it drawn in as a storage area. All permits were submitted for and all inspections were completed. One month after the final co was issued, the same contractor returned to make the new area into a master bath. The wiring and plumbing were installed between the insulation and sheetrock stage, (so it was hidden.) After the job was completed, the heater that was installed in the jacuzzi over heated, melting the circulatory pipes and created a leak that went unnoticed. Homeowner fiqured the pump went bad and called for service. Long story short, massive water damage, plumbing damage, calls homeowners and nothing is covered. Calls contractor and is now ( three months later) still waiting to have the molding sheetrock removed and the problems fixed. Contractor wants more money to fix problems. Hell of a problem. Get the proper permits, if working with contractors that tell you different, it should be a major red flag as to their job ethic/business ethic.

[Bayviewrr]

That does not sound right based on my years of insurance work. The insurance policy is a contract between the homeowner and the insurance company. In order for there to be certain conditions that the homeowner has to meet in order to be paid under a claim the policy must specifically state these conditions. They are called Warranties.

 

Most insurance policies sold today are pretty much the same basic boiler plate contracts. Each individual company then takes this boiler plate and adds their own "bells and whistles" to make their policies a little better than another companies'. I am not aware of any warranty that would exclude coverage if any type of work done on the home did not have the applicable permit. You are right, it would be impossible for them to keep track of all that with so many people doing work on their home without permits.

 

This reminds me of the myth of the hurricane windows where I live. I am out on a barrier island and building code requires that on any new construction you use the hurricane glass windows. They are roughly twice as expensive as standard glass windows. Most people where I live (NJ) feel they are not needed, but the general myth was that if you didn't build with the hurricane windows that the insurance company would not pay a claim. I looked into it. Not true. There are no warranties in a homeowners policy that state you must build to code in order for a claim to be paid. This relates back to what you were saying about getting the permit, i.e., getting the permit ensures that you are building to code.

 

LOL.....my disclaimer is that I have been out of the insurance business for 12 years and am now in construction. Things may have changed.

[Bayviewrr]

Long story short, massive water damage, plumbing damage, calls homeowners and nothing is covered. Calls contractor and is now ( three months later) still waiting to have the molding sheetrock removed and the problems fixed. Contractor wants more money to fix problems. Hell of a problem. Get the proper permits, if working with contractors that tell you different, it should be a major red flag as to their job ethic/business ethic.

 

 

This may be been denied by the insurance company under the exclusion of "Back up of sewer or drains" which is a standard exclusion on homeoners policy, not because a permit was not obtained for the work.

[DerrickT]

Alot of contractors around here skip getting permits. Creates a real pain in the ass.

 

I have actually witnessed a remodel get shut down by an inspector while we were delivering kitchen cabinets. She made everyone stop what they were doing and leave.

[shark lobster]

My neighbor went to a tax meeting to discuss her recent re-evaluation. She was told that if she did improvements on her house w/o permits and something happened, the insurance co. would check with the township to see if permits were obtained. If none were, the insurance co. would not pay for repairs. That would also extend to future owners when they sell. Has anyone heard of this?

 

I and probably half the township has had work done (replacing water heaters, HVAC units, etc) w/o permits so are we now not insured if anything goes wrong? This is the first time I'm hearing of this.

 

If above is accurate, how does one go about correcting the situation?

 

this is true to the point , of what you have had done ,, remember ins co take pics of your property ,, when you sign with them and every few years after ,, if you have a addition put on ,, with or without permits and you dont notify ins, then you have a fire ,, they dont have to pay for the additional sq footage that was not coverd under origanal agreement,, also you need to tell them if you make upgrades to hvac ,,,

[Kings over Queens]

She was told that if she did improvements on her house w/o permits and something happened, the insurance co. would check with the township to see if permits were obtained. If none were, the insurance co. would not pay for repairs.

 

100% BS.

 

Not true. Complete myth. Almost equal to the one that red cars cost more to insure. Nonsense.

 

Bayviewrr explained it very well.

[Kings over Queens]

this is true to the point , of what you have had done ,, remember ins co take pics of your property ,, when you sign with them and every few years after ,, if you have a addition put on ,, with or without permits and you dont notify ins, then you have a fire ,, they dont have to pay for the additional sq footage that was not coverd under origanal agreement,, also you need to tell them if you make upgrades to hvac ,,,

 

Not true.

 

It's a good idea to make sure that any addition you put on doesn't cause the cost to rebuild the entire structure to be over what you carry in dwelling limit.

 

But to say that they won't pay if you don't tell them isn't accurate.

[gobigblue]

im going through this right now finishing my basement as a diy job. i took out permits for everything (plumbing/electric/construction) mainly because i wanted someone to check my work and i didnt want problems when i went to sell the house. my rough inspections were all approved before i was even ready to have the guy come out because he could see i knew what i was doing. he just showed up one day. the electrical inspector failed me initially because i didnt have an outlet on a small 30inch piece of wall, completely ridiculous. nothing will ever be plugged in there. total eyesore IMO.

 

i called my homeowners insurance this week to find out the deal, they said thanks for getting permits. i never really pressed the issue further. i have $5000 in coverage for sewer/sump pump backup since my basment is labelled unfinished. obviously when im done with everything i am going to increase that amount. all they said i need to do is give them the measurements of the house and the measurements of the finished area. to go from $5000 to $25000 in coverage its going to cost me something like $10 more per month. sounds really reasonable to me. i dont see any point in getting a permit to change a water heater or some hvac, thats silly. a total basmement finish, adding a bathroom and a ton of outlets and lights, definitely.

[foxfai]

My neighbor went to a tax meeting to discuss her recent re-evaluation. She was told that if she did improvements on her house w/o permits and something happened, the insurance co. would check with the township to see if permits were obtained. If none were, the insurance co. would not pay for repairs. That would also extend to future owners when they sell. Has anyone heard of this?

 

I and probably half the township has had work done (replacing water heaters, HVAC units, etc) w/o permits so are we now not insured if anything goes wrong? This is the first time I'm hearing of this.

 

If above is accurate, how does one go about correcting the situation?

 

Most of this is true, but to the extend of it. Insurance are not necessary tie to the work that is done to the house.

 

If there is any major addition to the house, for example adding a porch, finishing a basement, there should be permit pulled. Also take pictures to notify insurance that the porch is added so they will cover it in case the house burn down. However, insurance rate will go UP because they have an extra items to cover now.

 

If you install a marble counter, super fancy tile bathroom floor, sink etc and you didn't pull permit and didn't notify insurance company that you installed this, they will tell you we don't have those item on file and can deny your claim even if you had pull a permit for this.

 

Follow me?

 

Water heater, heating system is already part of the house. It's part of their coverage. If you don't tell them that those are new and if the house burned down, do you think they will cover it?

 

I mean they don't have a clue those are replaced right?

 

Insurance company will go through hoops to find something and deny your claim. Checking to see if you have a permit to have something done is one of them.

[Bayviewrr]

If you install a marble counter, super fancy tile bathroom floor, sink etc and you didn't pull permit and didn't notify insurance company that you installed this, they will tell you we don't have those item on file and can deny your claim even if you had pull a permit for this.

 

Insurance company will go through hoops to find something and deny your claim. Checking to see if you have a permit to have something done is one of them.

[/code]I don't mean to argue the point but two of the issues you pointed two are totally incorrect. A homeowners policy has a specifies a limit for the structure of the home and for the contents of the home. With the exception of a few items that they put specific limits on (i.e., cash, jewelry, guns, etc.) there are no policy exclusions on specific items. So, if you have a Formica counter top and replace it with a marble counter top and you never notify your insurance company and then have a claim, it will be covered, subject to the policy limits. Where people get into trouble is when they make substantial improvements on their home and increase the total replacement value of their home or contents but fail to increase the coverage on their policies. So, if you have a home insured for $200,000 and then add an addition that increases the replacement value to $300,000 but fail to increase policy limits, the insurance company will only pay the $200,000 in the event of a total loss. They will not deny coverage because you did the work and did not notify them of the changes.

 

With regards to insurance companies looking for ways not to pay, in the big picture I find this totally incorrect. What I have seen however, is a total lack of understanding by the homeowner of what an insurance policy covers. A policy does not cover EVERYTHING. There are exclusions on the policy. But I can't tell you how many times I have had people call in the claims that were denied and they said "I've paid my premiums for so many years and never had a claim. Now I have a claim and they won't cover it. They are ripping me off!" Not true. People are just ignorant of what their policy covers and what their policy excludes. For example. Most policies exclude damage caused by back up of sewers or drains. It is a standard exclusion on most policies. So, if your toilet backs up and overflows, flooding your house and causing damage, Not covered. Most people don't realize this, so they have the claim, call it in, it gets denied, and they think the insurance company is ripping them off, yet it was excluded from the start.

 

It always amazed me at the amount of money that people spend on insurance and for the most part, they have absolutely no idea what they are covered for and, more importantly what they are not covered for. It is a shame that a lot of people find out after the fact.

[Kings over Queens]

I love this guy. ^

[specialist]

Permits= More money for the towns by way of higher assessment when done.

 

Just out of curiosity, if a homeowner does electrical work and pulls a permit and has it inspected and passed, then has an electrical fire 5 or 10 years down the road will it be covered when they found out he did the work himself?

[ted527]

 

Just out of curiosity, if a homeowner does electrical work and pulls a permit and has it inspected and passed, then has an electrical fire 5 or 10 years down the road will it be covered when they found out he did the work himself?

 

 

as long as a permit was pulled and inspection done i don't see how they could deny coverage. you are allowed in NJ to do any work you want to your own single family house as long as you get the required permits.

 

from some of the work i see contractors doing, HVAC permits are one of the most important ones.

 

there are some real hacks out there doing scary ****e and getting away with it......

[Kings over Queens]

then has an electrical fire 5 or 10 years down the road will it be covered when they found out he did the work himself?

 

Yes.