I looked at the Homeowner's Policy through one of our underwriters and it covers the inability to obtain a builder's permit. It sounds like you actually can get a permit, but just not to build exactly where you'd like. My guess is that you wouldn't get much coverage, plus there is a deductible anyhow. IMO, I wouldn't even attempt a claim and this is of course assuming you have the expanded coverage anyhow.
Can you draw out your lot, roads, and how the house sits? Are you on a culdesac or a corner lot? If you could, draw your neighbors as well and where their houses sit and what is front vs. back. Just a rough sketch would work. I do have quite a bit of experience with helping people on zoning variances and working with county plan commissions. I hope I can help, but it's hard to understand exactly what is going on without seeing some sort of photo or illustration.
