Missing permits and your insurance coverage
A while ago, Sam Schneiderman, broker owner of Great Boston Home Team wrote about building inspectors. Today, he picks up the tread in light of recent storm damage.
In 2009, I shared what happens when projects are completed without permits, including having the inspector sign off on the permit after completion. When this blog’s software was updated, the comments were lost, but I remember some of our readers voicing their skepticism about getting involved with building inspectors.
Many homeowners don’t want to bring in building inspectors because they fear that their property assessment and taxes will go up when the town’s property files are updated to reflect the improvements. Many contractors don’t like to bring in the inspectors because it slows down the job and they have to charge more plus add the cost of permits to the job. In the end, pulling a permit holds the contractor accountable to someone that knows more about the building code than the homeowner and often the contractors. I am not sure how that can be a bad thing.
I recently came across an old house that had an attic converted to a master bedroom suite about 20 years ago. Lack of a fire escape and several other things made me wonder if the work was up to snuff. A trip to the building department confirmed that there was no permit for the renovations. When I calculated the square footage of the house against the building code’s allowable living area for the home’s lot size, I discovered that the attic expansion created a violation of the building code; the new finished attic plus the home’s original living area now exceeded the allowable living area for the lot.
Aside from zoning and potential safety violations, the question of insurance coverage was a concern. I sent the following question to several insurance agents and Anne Petelle of Network Insurance Brokerage in Wilmington was able to get the following response below from two insurance companies:
Question:
”My client is looking to buy a home. He has just learned that the attic that was turned into a master suite never had any permits pulled. How does this affect him? If there was a loss that involved this space, would they be covered?”
Answer #1:
“I guess it would depend on the claim. If there was an electrical fire which originated from this room, most likely we would cover and maybe subrogate against the prior owner if we suspected negligence. I would see if there is anything the town can do in regards to having the construction inspected.”
Answer #2:
“If a covered event were to damage the attic space, we’d cover the damages. They would also have 10% code upgrade under the HA300 endorsement if say that covered damage was not up to code to repair. We wouldn’t cover any defect in construction though. I’m not sure what their local building inspector would require them to do since the permit wasn’t pulled.”
Pay careful attention to the sentence above in italics. Since there is no way to see the plumbing and wiring in the walls, there would be no way to know If there was a “defect in construction” or not. If there were a signed off permit, that should at least be a reasonable indication that the building inspector certified that the work met building code standards when constructed.
Would you buy a property like the one described above?
If you were selling it, what would you disclose or tell your agent?
Would you do substantial work without permits?
