Declined insurance claim

[Dave Chow]

Recently we heard a story while closing our property. A rental house got fire and burnt down, and the insurance company refused to bring the house back, mainly the finished basement. The reason was their basement work was un permitted work which did not agree with city code. The insurance company declined claim due to causing of fire from un permitted work.

This is kind of scary. People buy insurance but they cannot get covered and they even did not realize the coverage items in the insurance. The sad story is they did not realize it until incidents happy which is an expensive experience. 

How do experienced rental investors avoid situation like that when purchase insurance for rentals?