My sister-in-law and her family own a very nice waterfront home on my favorite spot on the planet - Flathead Lake in Montana. We get to visit and stay there for a week every summer and it is one the highlights of our year as a family.
Their home was originally built back in the 1980s and is one of the few homes built literally right on the beach. This is a rarity because in the years following the construction of this home the building ordinances and the environmental restrictions have changed to prohibit any other new home from being built so close to the water. So not only do we get to enjoy the benefit of being on the water's edge, but my sister-in-law gets a slight boost to her home's market value because of this rarity.
But there's a risk to her because of her home's uniqueness. If her home should be destroyed by fire she would not be able to obtain the permits to rebuild her home as it is now because of those changed building codes! And because of the hillside that sits immediately behind the home, the cost to excavate, grade, and shore-up the land in order to rebuild farther back from the water (and meet current codes) would be extremely expensive (an extra few hundred thousand dollars worth)!
Fortunately, we discovered this in our risk review for her and we developed a plan to help reduce her out-of-pocket exposure to these potentially huge extra costs. In her case we worked with a contractor to asses the potential added cost to reconstruction and then added more Ordinance & Law coverage to her home insurance policy. And because this huge potential cost was no longer the same threat to their financial position, it allowed them the comfort to invest in a total remodel of their home just as they always wanted!
Taking care of this risk gave her family the freedom to do something else with their money.
