Home Reconstruction Cost: How Much Coverage Do You Need?

Today’s insurance topic is home reconstruction cost. If you are a single family home owner, a rental property owner, or if you sit on a board of a Planned Unit development or a condominium association you need to know how much property coverage is in your policy to rebuild after a major total loss and that’s very, very important especially for us Californians.

Today, I’ve been very lucky to have the good fortune of bringing in a general contractor who has been rebuilding homes here in the San Francisco Bay Area for the past 20 years. His name is Mark Labourdette and he’s going to tell you how much coverage you need to rebuild and, he might even talk a little bit about Building Code Ordinances. Let me introduce you to Mr. Mark Labourdette of Design Builders, Inc.

Thanks Kevin for inviting me. I appreciate that so Kevin is smart to get you thinking about this because one thing I’ve learned after years of handling and dealing with clients who’ve suffered major losses they’re often under-insured so it’s super important you think about this concept.

The cost to rebuild a home that is burned to the ground like in the Oakland Hills fire and the 90’s and obviously in Santa Rosa is substantially more than most policyholders have. So, typically, the face value of the policy is super important – that it be right – because code ordinance and a lot of additional stuff is based on the face value of your policy. So what does it cost to rebuild?

I can tell you by time we get plans and permitting done, which can typically be 10% of a loss, and with everything involved you have to be thinking about four to five hundred dollars a square foot in order to be properly covered. If you insure for less than that you assume risk, that’s all there is to it. Often times we’ll get involved in whole loss, fire losses. The typical one in Santa Rosa now, a million two to a million three. That’s the average cost to rebuild those homes. Base value policies typically in the $700,000-$600,000 range and they’re under-insured. One third of the homes in Santa Rosa area were under-insured and they’re sitting on land that they own and they can’t rebuild on it.

So you want to think seriously about having proper insurance and how much you risk you want to take on as a homeowner. Kevin can help you figure that out.

Typically at $500 a square foot you’re going to be safe unless you live in a high-end home. Where your home is located is super-important too, a 4,000 square foot home up in the Mill Valley Hills up in the corridor and up in the redwoods in the Hills is one thing, a 4,000 square foot home and Bel Marin Keys in the middle of the ocean is another so location makes a difference and it could be a substantial difference in what your home should be valued at. So code ordinance upgrade is super important because nowadays in California code upgrade applies to everything. Your foundation, everything has some version of a code upgrade and it can be $100,000-$200,000 for a code upgrade on a $800,000-$900,000 bill so it’s substantial. You have to pay attention to that, as every home is different, every home has little nuances to it but if you factor in the quality level of your home and where it’s located give a little practical thought to it you come out with an accurate price to properly insure your home.

That’s where you call Kevin he can help you. I’m open for discussion always and call Kevin, he knows how to get a hold of me, Mark Labourdette of Design Builders, Inc. So make sure you’re properly insured for your home reconstruction cost so if you suffer a loss you don’t have to worry.

Okay Mark, thank you very much. Wow, that was really useful information. As you know, if you have a problem with your car you go to a mechanic, if you have a tax problem you go to your CPA,  if you need a home reconstruction expert you want to talk to a general contractor. Mark’s been doing this for a long time so thanks again Mark, that was really useful.

Well that’s it today, I hope our insurance video today sincerely helps you with your home reconstruction cost and coverage down the road.

June 2022 Update: This excellent article discusses the current rebuilding costs in CA. It breaks it down by major geographic areas in CA.