Reconstruction can be pricey
Reconstruction cost – the cost to rebuild your home to original specifications with similar materials and craftsmanship – is generally more expensive than building a new home from scratch. In fact, building experts say that it costs up to 30 percent more to rebuild a house than to build new. * Why?
Specialized labor costs: Builders used for reconstruction require a higher skill set, as they have limited onsite mobility and must work around existing structures, landscaping and power lines using smaller machinery.
New codes: Rebuilding may require contractors to meet new building codes put in place since your home was originally built.
Don’t rely on market value
Home market values reflect today’s economic conditions, taxes and many other factors that have little to do with home reconstruction costs. Plus, market value includes the cost of the land, which will still be there if a home is destroyed. Market value is also influenced by other factors such as the location of the home, the quality of the school systems and the desirability of the neighborhood.
New construction costs explained
Insuring your home for what it would cost to build it brand new today won’t be enough to rebuild it if it were destroyed. Here’s why: Typically, new homes built today are part of a housing development which allows contractors to purchase lumber, electrical and plumbing supplies in bulk at discounted prices. These large volumes make square foot costs much lower than building just one home at a time.
Keep your coverage up-to-date
You should review your homeowners policy with your agent periodically to verify that all of your coverages are adequate. Although most companies increase coverage amounts amounts each year to account for inflation, this increase does not reflect any changes or additions you may make to your home. even common changes such as installing hardwood floors, adding a deck or patio, finishing a basement or updating a kitchen or bath can affect your replacement cost. That’s why ist’s very important to contact your agent when making any home improvements.
When in doubt, request a review
To determine whether you have enough coverage to rebuild your home, call your agent for a coverage review.
*Researched by Marshall & Swift/Boeckh, 2008