Does My Insurance Settlement Cover the Code Upgrades?

Your insurance settlement was calculated to replace the house you had. The building department requires the house you’re now allowed to build. Those are two different houses, and the gap between them is where most fire rebuild budgets go wrong.

A home framed in the 1940s was legal in the 1940s. Rebuilding it in 2026 means meeting 2026 code — fire sprinklers, ember-resistant vents, Title 24 energy compliance, current seismic standards. None of that existed in the original structure, so none of it is necessarily in your settlement.

Here’s what the code actually requires, how to tell a code upgrade from a finish choice, and how to get the first one covered.

What 2026 code requires that your old house didn’t have

These apply to rebuilds in Wildland-Urban Interface zones, which covers Altadena and Pacific Palisades:

• NFPA 13D fire sprinklers — residential system, whole house
• Class A roof assembly
• Ember-resistant vents
• Enclosed eaves and soffits
• Tempered or multi-pane glazing
• Noncombustible exterior wall coverings
• Title 24 energy compliance
• Current seismic and structural standards

Most of this comes from Chapter 7A of the California Building Code, the wildfire-hardening chapter. Your plan checker will reference it by name, so it’s worth knowing the term when you’re reading your own drawings.

Solar is suspended — but “solar-ready” is not

On 7 July 2025 the Governor signed an Executive Order suspending rooftop solar and battery storage requirements for homes lost in the January 2025 wildfires. If you are rebuilding after the Eaton or Palisades fire, you are not required to install panels or storage.

You are still required to build solar-ready. That means the conduit, the panel capacity and the roof structure have to be there even if the array is not. It is cheaper than a full system, but it is not free, and it belongs in your electrical rough-in scope from the start.

Source: LA County Recovers — Suspension of Solar Installation Requirements

Executive Orders get extended, amended and allowed to lapse. Confirm current status with your plan checker before you budget around it.

The code delta is not the same as your finish budget

This distinction decides what your carrier will pay for, so it is worth getting right.

A code upgrade is something the house is now required to have that the old one did not. Fire sprinklers are the clearest case. A 1940s house had none. NFPA 13D requires a whole-house system today. Every dollar of that is new scope created by the code, not by you. Same with ember-resistant vents, enclosed eaves and soffits, and current seismic bracing — the original structure had no equivalent, so there is nothing to “replace.”

Your finish level is a different thing entirely. Your old house had windows. The new one will have windows. What changed is that the glazing now has to be tempered or multi-pane. The code delta is the difference between a plain replacement window and a compliant one — not the cost of the whole window package. If you then choose steel frames over vinyl, that is your decision and your money.

Carriers pay the first. They do not pay the second, and a scope document that blurs the two is a scope document that gets declined.

What it actually costs

Across our Altadena and Pacific Palisades rebuilds, code-required scope has run from about $30,000 to over $200,000. That is a wide range and it is not arbitrary. It tracks how far the original house sat from current standards. A 1940s house with no sprinklers, combustible eaves, original wiring and pre-1970s framing carries far more code delta than a house built in the 1990s.

You cannot estimate this from a per-square-foot figure. It has to be scoped against your specific house and the code your specific jurisdiction is enforcing.

Your policy decides how much of it you get back

The building department decides what the house must include. Your policy decides how much of that the carrier pays for. Those are two separate questions and homeowners routinely merge them.

The relevant provision is Building Ordinance or Law coverage. It sits separately from your dwelling limit and is usually capped as a percentage of it. Across the policies we have worked with on Altadena and Palisades rebuilds, that cap has typically landed between 10% and 25% of the dwelling limit — and some policies carried no ordinance-or-law coverage at all. Your policy is your own; read it or have your adjuster confirm the number.

Run the arithmetic before you plan a budget. On a $800,000 dwelling limit with a 10% cap, you have $80,000 available against a code delta that could be $150,000. The difference comes out of your pocket, and you want to know that during design, not during framing.

When to find out — and it’s earlier than most people think

Ask your contractor for a code-upgrade scope document at the start of planning, before design is finalised. Not during framing, when a change costs weeks.

That document does two jobs. It tells you what the house has to include before you fall in love with a floor plan you can’t afford. And it gives you something to hand your insurance carrier while the claim is still open.

We build ours in Xactimate, the estimating platform most carriers use internally. Carriers have different processes and cost codes, but they all read Xactimate — submitting scope in the format an adjuster already works in removes one reason to push back.

You can reopen a settled claim

This is the part most homeowners don’t know.

A settled claim is not necessarily a closed one. If code-required work was not accounted for in the original settlement, that scope can usually be resubmitted. What it takes is a builder willing to document it properly and stay with it through the back-and-forth.

We have reopened seven settled claims for Altadena and Pacific Palisades clients whose original settlement did not cover code-required work.

We prepare the supplemental scope, submit it in the carrier’s format, and push back when a carrier declines it. That is part of the job, not an extra.