Rebuilding Your Home After a Disaster Will Cost More Right Now

NBC 7 Responds looked at what you need to know to keep your home protected

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If disaster strikes, your insurance might not cover the cost of rebuilding your home. Insurance agents say construction costs are very high. As California warns of an early fire season, it might be a good time to revisit your home insurance policy.

"Right now, everybody should be getting ahold of their insurance agent or their company and have that discussion," said Walt Waggener, a State Farm Insurance Agent. "Things have changed in a drastic way."

Waggener says the value of your home is not related to the rebuilding cost of your home. Right now the cost of rebuilding a home is skyrocketing.

"People want to make sure if their house burns down, they're going to get a house put back up," Waggener. "You really need to sit down with someone and try to come up with a good number that you can be sure is going to rebuild the house."

Contractors say the price of materials has jumped because of the coronavirus pandemic. That's causing a large increase in the cost to build a new home, or rebuild one that has been destroyed.

"Plywood prices have gone up between 20 and 30% just in a year," said Eric Kleiber of KP Contracting. "The supply is just not there anymore."

Kleiber is a cabinet maker of 30 years and says he's never seen a price increase like this before.

"A sheet of pre-finished birch plywood which we use inside of our cabinets was $35 a sheet," said Kleiber. "Now we're spending anywhere between $50 and $55 a sheet."

It's not just plywood. Kleiber says all lumber, as well as hinges and other materials made of steel, has jumped in price because of a lack of supply.

"The average price of a 2x4 was about $3 last year and 2x4s are going for about $8 a pop now," said Kleiber. "We had to increase our prices."

That's exactly why Waggener says you should talk to your insurance company. Most policies will have an inflation guard to protect against some price increases, but he says this a unique circumstance.

"I would say now is an unusual time," said Waggener. "It can cost four times as much this year as it cost last year for a certain type of thing that you would need to rebuild the home."

Apart from a pandemic, Waggener says price increases like this can happen after a large-scale disaster, such as some of California's recent fires, or when lots of people are remodeling.

"It can take a home that might be rebuilt for $250 a foot and contractors will want $500 or $600 a foot," said Waggener.

He recommends having a discussion with your insurer every two to three years about rebuilding costs. Most companies have some type of appraisal form they will use or you can get an estimate from a contractor. If you're worried about your insurance rates jumping higher, it might be less than you think.

"It's generally not a lot of money to add coverage to the top of a homeowners policy," said Waggener.

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