The Higher Costs of Rebuilding

According to many construction and insurance adjustment experts, there are many reasons for this. In almost all cases, a severely damaged existing home presents problems not relevant in new construction.

• Debris removal presents a number of problems, and may include hazardous material adding substantially to the cost of removal and disposal.

• The insurance process itself has an impact on the cost. In most regions you find more building contractors working in new construction than contractors working in reconstruction. One result is that competition in new construction is more intense, and there is generally less competitive pressure on price in reconstruction.

• The time factor involved. For example, when rebuilding, finishing walls in one or two rooms would require a few hours each day to cut and patch and fill and finish wallboard joints. A worker would have to return to the site for a couple of hours each day to finish the job. In new construction, the job would be scheduled so the worker could move from room-to-room, house-to-house more efficiently. A new house, on a vacant lot, allows more access to move and store equipment and materials.

• New construction provides clear cut plans. In reconstruction, things are not so well defined. Often, an architect may have to adjust materials and construction to meet current building codes. Also, contractors may be less familiar with the type of construction found in older homes, and that unknown factor often increases job quotes and the actual construction costs.

If you have any question whether or not your home is insured to the proper value, contact your Central agent.

The policy coverages described above are in the most general terms and are subject to the actual policy exclusions and conditions. For specific coverage details and policy exclusions, refer to the policy itself or contact a Central Agent.