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Market value versus
reconstruction costs |
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Homeowners Insurance
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Many homeowners equate
the "worth" of a home to its
market value, especially if
the home was a recent
purchase. While market
value is a valid calculation
of a home's worth for
buying and selling, it has
little to do with the cost of
rebuilding. The estimate
you are providing is the
amount to reconstruct the
home at today's costs.
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Economies of scale:
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It costs more for a
contractor to build one
home at a time because
materials are not purchased
in bulk. A single household
item that matches the one
that's been destroyed will
nearly always cost more
than if it had been part of a
larger purchase.
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Use of labor:
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When a builder constructs
many homes at once, they
can efficiently schedule
labor for carpenters,
plumbers, electricians and
other workers. For a single
rebuild, labor is not as
efficient and contributes to
higher costs.
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Access to worksite:
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Worksite access is easier
for brand new construction.
For reconstruction,
obstacles such as
neighboring homes, trees,
lawns, fences and other
landscaping prevent easy
site access. This makes it
difficult to transport
materials and can drive up
labor costs.
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Building code changes:
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Changes to building codes
may require costly updating,
even for undamaged parts
of a home. This could
include updating wiring or
other utilities and is costly,
especially for older homes
in the Stuart, FL area.
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Natural disasters:
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After a natural disaster, the
costs of building materials
and labor rise because of
increased demand. Over
the past 25 years, there has
been an increase in the
frequency and severity of
weather events, resulting in
a high number of losses
that require repairs.
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Protecting undamaged
parts of the home and
contents:
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Keeping a partially
destroyed home from
further damage until
permanent repairs can be
made adds to the overall
cost. This could involve
covering a damaged roof or
holes in walls.
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Specialized labor
is more costly:
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Reconstruction is often
completed by contractors
who specialize in rebuilding
as opposed to new
construction contractors.
Their specialized labor
tends to be more
expensive.
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Replicating old
construction methods
and materials:
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A standard homeowners
policy provides for
replacement with like kind
and quality, which means
replicating a home as it
stands today. In older
homes, interior walls are
often made of plaster
instead of drywall and
exterior brick walls are made
of solid brick instead of
modern brick veneer.
Homes constructed prior to
1940 were built with full
dimensional lumber, which is
larger and more costly than
typical modern lumber.
Because of features and
materials such as these,
older homes, especially
those built prior to 1940,
cost more to replace. In
addition, the rising cost of
commodities contributes to
higher reconstruction costs.
For example, petroleum
based materials such as
shingles have increased in
cost dramatically.
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Why is reconstruction
cost more expensive than
new construction?
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Rebuilding a home includes
many factors and expenses
not considered in new
construction.
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Top-down versus
bottom-up:
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Repair work for a partially
destroyed home is done
from the top of the home
down. This is more time
consuming and labor
intensive.
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Demolition and debris
removal:
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This step is necessary
before reconstruction can
begin and adds to the total
cost.
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STUART
(772) 287-1560
(772) 287-1950 fax
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49 SW Monterey Road
Stuart, FL 34994
M-F 9:30 - 5:00
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INSURANCE AGENCY
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AGRILLO
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772-287-1560
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Since 1992
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Click on the link below to fill
out a Florida Homeowners
Insurance quote form.
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Agrillo Insurance Agency
© 2005, All Rights Reserved
© 2005, All Rights Reserved
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Homeowners
Insurance Services
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