Understanding home rebuilding costs

December 15th, 2015 in Insurance

Understanding the cost to rebuild your home

Your home is probably one of your most valuable possessions. It is important that you make sure you have enough coverage on your homeowner insurance policy to rebuild it to its original state if it is destroyed by an insured loss.

Items that affect the cost to rebuild your home:

  • Total square footage of home.
  • Style of home
  • Age of home
  • Exterior wall construction ( 2x6 versus 2x4)
  • Number of kitchens and bathrooms and quality of construction/finishing materials
  • Garage type
  • Special features (e.g. fireplaces, sundecks, custom cabinetry skylights)
  • Type of flooring
  • Secondary suites
  • Ceiling height
  • Type of finishing (e.g. Granite countertops, custom millwork,built ins.)
  • Type of heat ( geo thermal is more expensive than natural gas furnace)    

Why rebuilding costs can differ

The cost to rebuild your home will be different from mortgage valuations,tax assessments and real estate appraisals. This can be due to a number of factors:

  • The costs for building materials have increased in recent years.
  • The insurance company wants you to be able to return to your home a soon as possible and thus they are not waiting for price discounts nor do they shop around for “sale” items.
  • Specialized workers are often needed, in the event of a loss, to prevent further damage to your property or your neighbors property.
  • Building codes usually have changed since your home was built.
  • Rebuilding costs include debris removal and demolition cost. You cannot load everything in a dumpster and take it to the dump it must all be sorted and sent to different facilities.
  • Depending on the age of the home there may be asbestos or other hazardous materials used in the original construction. This will significantly increase demolition and debris removal cost.

Inform your insurance broker when you renovate your home.

Renovations that increase the size of your home or improve the original construction of it will increase the amount of coverage you need. Examples of changes that could increase the amount of coverage you need include: updating a kitchen or bath, increasing the sq. ft. of the home, finishing a basement, adding a deck or updating the flooring to hardwood or other more expensive flooring material.

Suggestions to keep your building insurance coverage current:

  • Review your building insurance coverage every year with your broker to be sure it reflects the current cost to rebuild.
  • Inform your broker of any home improvements or remodeling projects that you do during the policy term.
  • If the project involves a large renovation that increases the size of the home inform your broker prior to starting the project.

If you require any further general information regarding rebuilding cost please contact our office. We would be please to do a complete review of your home insurance including a rebuilding cost guide to ensure that you have the coverage that you need.

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