ADJUSTERSINTERNATIONAL.COM 3 and other groups to promote the implementation, upgrading, and enforcement of building codes and land use regulations. Despite those efforts, only about a third of communities across the U.S. have adopted current codes without weakening provisions designed to help structures withstand natural hazards.1 To speed progress on building code adoption, the Biden Administration in June 2022 launched its National Initiative to Advance Building Codes. This program uses federal infrastructure funding to advance the use of building sciences while mandating that federally supported construction financing ensure that funded projects adhere to modern building codes and standards.2 As more and more communities adopt building codes, upgrades to those codes come more rapidly. The International Code Council (ICC), created in 1994 to consolidate the maintenance and upgrading of building standards, now seeks to upgrade each of its 15 codes every three years. Growing exposure Building codes do not have the effect of law until jurisdictions formally adopt them, and statutory codes don’t necessarily include all the most recent provisions. Nonetheless, the proliferation and updating of building codes and land use regulations results in a growing number of buildings that do not conform to standards currently in effect. Existing buildings are generally “grandfathered” and considered compliant at the time a code is adopted or revised, but structures and systems will have to be reconstructed or reinstalled up to current standards when a building is substantially renovated, remodeled, or repaired. Municipalities establish their own thresholds for the extent of work needed to trigger that requirement; typical thresholds are 50%, 60%, or 75% of a structure. At the point where the extent of physical damage triggers a requirement to rebuild, in essence, a property owner faces a three-fold task: • Repairing or replacing damaged property with new property that complies with relevant codes; • Demolishing the undamaged remainder of a noncompliant structure and removing the debris; and • Repairing or replacing the previously undamaged portion to bring it into compliance with current codes. In short, reconstructing property to conform with an updated building code is all but guaranteed to cost more than to reconstruct it “as was,” and a growing number of properties are exposed to the potential for this additional cost. Under replacement cost settlement, the insurer commits to covering the cost of repairing or replacing damaged property with property of like kind and quality, without regard to depreciation.
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