Have you done a major renovation to your home lately? If you have, it will likely affect the reconstruction costs associated with rebuilding your home and it is a recommended time for a conversation with your insurance professional. Remembering to regularly review your home coverage with an insurance professional is a good step towards maintaining a level of insurance adequate to rebuild your home, in case of disaster.
So why else do reconstruction costs differ from a home’s market value or even the cost of new construction? Reconstruction costs can be affected by a number of factors, including but not limited to:
- Economies of Scale – When houses are originally built, it is usually a case of many homes being constructed at the same time. This means that materials and fixtures required for the builds can be purchased by the contractor in one transaction, and often at a bulk rate. Just as buying 50 or 100 bathtubs at the same time will cost less per unit than buying just one, you can apply the same economic benefit to buying almost anything else required for home construction in quantity as well. This can add up to thousands of dollars in savings when compared to single home builds.
- Reverse Reconstruction – New construction almost always follows the pattern of establishing a foundation and building up from there. When reconstruction is required, and you need to rebuild a home that isn’t a total loss, you need to start by pulling off the roof and working from the top down. As this process is labour-intensive, and takes more time to accomplish, it is generally more expensive as well.
- Site Preparation – When a home needs to be reconstructed, the site it sits on needs to prepared before any new construction can proceed. This usually means additional costs for demolition of any remaining (unusable) structure and removal of the resulting debris. In cases of intense fire, soil remediation may be required as well. In new construction projects, site preparation is usually limited to costs for brush removal and grading.
- Labour Costs – Having tradespeople such as carpenters, brick layers, drywallers, electricians, plumbers, roofers, and painters all onsite for an extended period of time can aid in scheduling and efficient usage. If a particular home isn’t ready for work requiring their specific expertise, they can probably be moved to work on a home that is. This flexibility in scheduling is not usually possible when working on a single home, and has a huge impact on overall costs when you consider that labour is one of the largest components of reconstruction costs.
- Accessibility – Reconstruction of a destroyed home is often required in established neighbourhoods with mature trees, lawns, landscaping, and fences. These and other obstructions may limit access to the worksite and thereby increase costs in getting needed reconstruction materials to the worksite.
- Older and Custom Homes – Reconstruction of older or custom homes generally must include the replacement of features and finishes which are considered