Reconstruction vs Construction

What is the insurance answer regarding reconstruction vs construction? The concern is that rising costs will cause a situation, where your building is not insured for enough value. When a claim occurs, there will not be adequate funds to rebuild. Part of the problem is, that there is a lack of awareness that reconstruction is much more expensive then initial construction.

An example to consider, is purchasing a new car. If you bought each part separately and then paid to have the car re-assembled, it would cost considerably more then the purchase price of a new car.

Consider rebuilding your home in the same context. To rebuild even a portion of your home requires the hiring of tradesmen, purchase of supplies at today's market value and the consideration of working in a developed area. It is more difficult to bring in heavy duty trucks or large equipment to a residential neighbourhood.

What if your home has some unique construction? Specialty trades may have to be hired. Perhaps some of the wall coverings or floor surfacing materials have to be specially ordered. These items all increase costs.

If you have suffered a severe fire, then there is the possibility that your concrete foundation is cracked. Part of your debris removal will be breaking this concrete into pieces to transport. Many of the materials inside a home, can be toxic and have to be removed in a certain manner. These costs are part of reconstruction but not construction.

Be aware of the financial peril of co-insurance. Like everything else, it is a good idea to know what you have, and how it's value is being affected by economic change.