The Hidden Costs of Reconstructing Your Home after an Emergency

Experiencing the loss of your home due to a fire or severe weather is already overwhelming. The added concern of inadequate insurance coverage for rebuilding or full reimbursement should not weigh on you, yet with replacement costs soaring, this worry is increasingly prevalent.

Why is it so expensive to replace a home these days? Consider these variables:

  • Location: The location of your home plays a significant role in reconstruction costs. Materials tend to cost more in expensive areas such as major cities and high-end neighborhoods.
  • Square Footage: The bigger your home, the more it will cost to replace.
  • Architectural Style and Quality: Homes with unique furnishings, intricate details, upgraded materials and custom designs often cost more to replace because they require specialized labor and materials.
  • Amenities and Upgrades: Items and upgrades such as swimming pools, designer kitchens and spa-style bathrooms will add to the cost of replacement. These luxuries are typically not standard in homebuilding.
  • Local Building Codes and Regulations: Each municipality has its own set of building codes, and adhering to those rules can be costly. Permits and inspections may also add to your cost.
  • Debris Removal and Clean Up: Cleaning up after a catastrophic event can be very expensive, especially if it involves hazardous materials or asbestos. Even more so if a partial structure remains.
  • Labor and Materials: The principle of supply and demand dictates that in times of economic prosperity, there’s greater spending power for construction, resulting in price hikes. Recent price surges in materials stem from supply chain disruptions and tariffs on imported goods.
  • Accessibility: The more difficult it is for construction crews and equipment to access your property, the higher prices go. A home built into a hill or steep slope will require special equipment to navigate the terrain.
  • Environmental Factors: Green building and energy efficient homes are more expensive to build, even if those moves save you money in the long run.

RCM&D encourages you to consider these variables when purchasing homeowner’s insurance. Remember that market value is very different than replacement value. Market value considers location, demand and even the amount of time the home has been on the market. Replacement value is strictly what it will cost to rebuild your home with the above variables in mind.

Reach out to an Advisor

Reach out to an RCM&D advisor to learn more about the replacement value of your home. We are here to help make sure you are not blindsided or compromised in an emergency.