Just to add some clarification; Most fire (homeowners) policies are “all peril” type policies and insure for all potential causes of loss except what is specifically excluded.
A claim for building damages associated with “Non-permitted work” could not be denied on that basis alone as it is not a typical exclusion. Construction defect and/or faulty workmanship is a common exclusion found in most HO policies and often goes hand and hand with non permitted modifications / additions, etc. So from a pure insurability stand point, I would focus on construction defects and workmanship and not so much on the fact that there was no permit taken out.
