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Insurance consequences of working without a permit

February 14th, 2011 Leave a comment Go to comments

There are consequences for the homeowner who has work done on his or her home without a permit beyond contending with the local building official.  What if a fire breaks out and an insurance claim is filed.  Will the insurance company pay? Sam Schneiderman, broker owner of Great Bostom Home Team recently addressed this issue on the Bostom.com’s blog, Boston RealEstateNow.    He asked a number of  insurance agents and brokers what would happen if someone finished off the attic of a home without permits and a fire destroyed part of the residence.  One possibility was that the insurance company would pay the claim and then sue any prior owner responsible for work done if negligence were involved.  (Often homeowners don’t realize that work was done without a permit unless they check with the local building department before buying a residence).  Another insurance agent said that the company might not cover construction defects.  Homeowners looking to save money are being penny-wise and pound foolish when they try to save a few dollars by not applying for a building permit.  Having a professional inspect the property not only protects their safety but also protects against liability in the future when it comes time to sell the residence.  Work performed without a permit must be disclosed at the time of sale.  Failure to do so could result in legal complications for the seller down the road.

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  1. Frank
    February 25th, 2011 at 10:11 | #1

    The discussion appears to be about possible issues–is there any case law that addresses the issue?

  2. Linda Pieczynski
    February 25th, 2011 at 10:54 | #2

    @Frank
    That would be determined on a state by state basis.

  3. Frank
    February 25th, 2011 at 10:58 | #3

    Okaaaay–is there “ANY” case law in any state you are aware of that talks to this issue?

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