reconstruction costs

Have you done a major reform in your house lately? If so, it is likely to affect the rebuilding costs associated with rebuilding your home and is a recommended time to discuss it with your insurance professional. Remembering to periodically review your home’s coverage with an insurance professional is a good step in maintaining an adequate level of insurance to rebuild your home in the event of a disaster.

So why do rebuilding costs differ from the market value of a home or even the cost of new construction? Reconstruction costs can be affected by a number of factors, including, but not limited to, the following:

• Economies of scale: When houses are originally built, it is usually a matter of many houses being built at the same time. This means that the contractor can buy the materials and accessories needed for the constructions in a single transaction, often in bulk. Just as buying 50 or 100 tubs at a time will cost less per unit than buying just one, you can apply the same economic benefit to buying just about anything else that’s required for quantity home construction, too. This can add up to thousands of dollars in savings compared to building just one house.
• Reverse Rebuild – New construction almost always follows the pattern of laying a foundation and building from there. When reconstruction is required, and you need to rebuild a home that is not a total loss, you should start by removing the roof and working from the top down. Since this process is labor intensive and takes longer to complete, it is also generally more expensive.
• Site Preparation – When a home needs to be rebuilt, the site it sits on must be prepared before any new construction can proceed. This usually means additional costs for demolition of any remaining (unusable) structures and removal of the resulting rubble. In cases of intense fires, soil remediation may also be necessary. On new construction projects, site preparation is generally limited to brush removal and grading costs.
• Labor Costs – Having workers such as carpenters, masons, masons, electricians, plumbers, roofers, and painters on site for an extended period of time can help schedule and make efficient use. If a particular house isn’t ready for the job your specific expertise requires, they can probably transfer to work in a house that is. This flexibility in scheduling is typically not possible when working on a single home and has a major impact on overall costs considering labor is one of the largest components of rebuild costs.
• Accessibility: Reconstruction of a destroyed home is often required in established neighborhoods with mature trees, lawns, gardens, and fences. These and other obstructions can limit access to the job site and therefore increase the costs of getting necessary reconstruction materials to the job site.
• Older and Custom Homes – Rebuilding older or custom homes generally must include replacing features and finishes that are considered unusual compared to more conventional homes. Whether rebuilding materials are in short supply due to age or classified as “high end,” the expectation is that they will be more expensive to replace. Some examples of expensive items to replace in the home may include tile or slate roofs or floors; lath and plaster walls; paneling; tin-clad ceilings, with exposed beams, or custom; solid wood doors; ornamental fireplaces; led or colored stained glass windows; shaped stairs; and custom hardware.
• Up-to-date building codes – In cases where homes are more than a few years old, it should be expected that building codes have changed since the home was originally built. Complying with newer codes may require rewiring, re-piping, using safety glass, or working with fire-retardant roofing materials.
• Natural Disasters: If your home was damaged or destroyed by a natural disaster, other homes in your area may need to be similarly repaired or rebuilt. In this case, it is not uncommon for material and labor costs to be higher due to shortages and increased demand for both.
• Partial Damage: If your home was only damaged and not destroyed, the remaining structure must be protected from looting and the possibility of further damage. In usual cases, personal property must be stored off-site until the home can be repaired. To prevent further damage, plastic sheeting material is typically used to temporarily cover portions of the remaining structure exposed to the elements.
• Permits and Fees: Reconstruction may require permits, home inspection fees, and architectural/engineering fees.
• Inflation – It’s no secret that material and labor costs continue to rise due to inflation. Depending on when your home was originally estimated to cost to rebuild, it may cost more to complete the project today.

For the reasons described above, rebuilding costs can differ significantly from the market value and cost of new construction. Prepare properly for a disaster by regularly reviewing your coverage with an insurance professional. Remember, the adequacy of your home insurance coverage depends on accurate information about your home’s size, location, age, unusual features and finishes, as well as details related to renovations or additions. The more you disclose relevant information about your home, the more fully your coverage can protect you in the event of a disaster.