Who do you think sets those codes you mentioned? The gubmit, dude.Ummm...Bullet? I didn't mention Government regulation...
Point is your house right now is built to certain codes in your area.
Another note... I don't think the government should assert any influence either way, financial or otherwise, in forcing codes or rebuilding in this type situation. I think their role is to educate and then let the ones that don't take heed handle the crap they catch when it hits the fan. I disagree with the gubmit picking up the tab on this just as much as I disagree with more rules/codes/regs/etc...
I'd have no problems with insurance companies refusing to insure my kerosene soaked cardboard box that I set up in Hell. If I chose to live in it I accept the risks. I don't think the gubmit, be it local or federal, should have any say so in it whatsoever. I think enough of our freedom has been eroded already by stupid regulations "in our best interest". When I got the land for my new home I got two acres. I went in for a builders permit and they tell me that my land is zoned agricultural and I must have 4 acres to build a house. WTF? There are subdivisions that have three or more houses to an acre and I have to have four friggin' acres to build a single family dwelling out in the country? Puuuuuuuuhlease! Now you know why "codes" is such a touchy subject for me.