Homeowners: Replacement and Construction Costs
Roswell Home Insurance
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One of the most common questions is why the replacement/construction cost is often higher than the market value of the home. Market value is affected by today’s economic conditions, taxes and many other factors such as location of the home, the quality of school systems and the desirability of the neighborhood. A home’s current resale value could be much lower than it was even a year ago or two years ago. The term replacement cost can also cause confusion as many customers think of it in terms of “if my home was destroyed, how much would I need to buy a similar home”? In reality, customers are insuring their home so that if it were destroyed or significantly damaged, they would be able to pay for all the parts to be rebuilt. Think of it in terms of a car – you could buy a brand new car for $30,000. But if you had to buy all the parts individually for that car and put it together, the costs could be significantly higher than $30,000. Market value also includes the cost of the land, which will still be there if a home is destroyed. This means if you have a particularly valuable lot because of its size or location, the market value (home plus land) could actually be higher than your replacement cost of an average house on that lot.
But my home didn’t cost that much to build new!
This is a common statement when clients are presented with a reconstruction estimate that is higher than what they paid to build their new home. Insuring your home to original specifications with similar materials and craftsmanship is generally more expensive than building a new home from scratch. In fact, building experts say that it costs up to 30% more to rebuild a home than to build new. How is it possible for the numbers to be so different?
- Economy of Scale – Typically, new homes built today are part of a housing development which allows contractors to purchase lumber, electrical and plumbing supplies in bulk at discounted prices. These large volumes make square footage costs much lower than building just one home at a time.
- “Top-Down” vs. “Bottom-Up” – New construction begins at the foundation and builds upward. Repairing a house that isn’t totally destroyed often means removing the roof and rebuilding from the top down, a far more time consuming and labor-intensive procedure. Fire damage, for example, may need to be addressed by an expert who can work to mediate the smell of smoke through special sprays and other techniques. This type of construction would not be required in a new constructed home.
- Demolition and Debris Removal – New home construction normally begins on open ground, perhaps with some brush removal and grading and other minor site preparation. Rebuilding begins with a partially or totally destroyed structure occupying the building site. Parts of the structure may still be standing but unusable, requiring demolition and removal. The site may have to be extensively cleaned – after an intense fire, for example, the soil may be contaminated. The foundation may have been damaged beyond repair. A lot of work is usually required before the first cement can be poured of the first nail hammered in.
- Use of Labor – When a builder constructs many homes at once, they can efficiently schedule labor for carpenters, plumbers, electricians and other workers. For a single rebuild, labor is not as efficient and contributes to higher costs.
- Access to Worksite – Worksite access is easier for brand new construction. For reconstruction, obstacles such as neighboring homes, trees, lawns, fences and other landscaping prevent easy site access. This makes it difficult to transport materials and can drive up labor costs.
- Building Code Changes – Changes to building codes may require costly updating, even for undamaged parts of a home. This could include updating wiring or other utilities and is costly, especially for older homes.
- Natural Disasters – After a natural disaster, the costs of building materials and labor rise because of increased demand. Over the past 20 years, there has been a significant increase in the frequency and severity of weather events, resulting in a high number of losses that require repairs. (See our blog post on using replacement cost estimators.)
- Protecting Undamaged Parts of the Home and Contents – Keeping a partially destroyed home from further damage until permanent repairs can be made adds to the overall cost. This could involve covering a damaged roof or holes in walls.
- Specialized Labor is More Costly – Reconstruction is often completed by contractors who specialize in rebuilding as opposed to new construction contractors. Their specialized labor tends to be more expensive.
Replicating Old Construction Methods and Materials – A standard homeowner policy provides for replacement with like kind and quality, which means replicating a home as it stands today. In older homes, interior walls are often made of plaster instead of drywall and exterior brick walls are made of solid brick instead of modern brick veneer. Homes constructed prior to 1940 were built with full dimensional lumber, which is larger and more costly than typical modern lumber. Because of features and materials such as these, older homes, especially those built prior to 1940, cost more to replace. In addition, the rising cost of commodities contributes to higher reconstruction costs. For example, petroleum based materials such as shingles have increased in cost dramatically.
Cindy Koegel is a Gillman Insurance Problem Solver and an expert in homeowners insurance. To get a quick quote or to ask any questions please contact Cindy via email at Cindy@GillmanIns.com or phone at 678-297-7977
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How to Budget for the Holidays
As your local area Atlanta Insurance Problem Solvers, we are always looking for ways to save you money. As you consider your holiday budget this year, we compiled a few tips to make your holidays merry without spending lots of money.
It’s best to prepare your holiday budget early, so that you can begin shopping early. Last minute shopping sprees can end up being a fiasco that results in over spending. When you start shopping early, you have more opportunities to take advantage of sale prices, special offers, and promotions. Shopping early means you won’t find yourself paying high shipping costs for quick, last minute deliveries. You will also have time to make adjustments to your holiday shopping list if you see that you’re getting close to reaching your maximum budgeted spending allowance.
If you are a meticulous record-keeper and have a list of last year’s holiday expenses, you can use this as a guide for creating this year’s budget. If you don’t have that information, you can try pulling figures out of your memory bank, or you can simply start with a blank slate and create your budget based solely on your current financial situation. Write down each person you plan to buy gifts for and put a money amount beside of their name. When you total it up, if it exceeds your financial ability, don’t opt to use a credit card to compensate. Either adjust the price you’ll pay for each gift or reduce the size of the list.
When budgeting for holiday entertaining, don’t attempt to bear the financial burden alone. Consider having guests bring items to parties. Use online sources for inspiration and DIY ideas to help curb the cost of entertaining. Check out sites that offer ideas for re-purposing items. You can get some holiday decor and party decoration ideas from these sites.
Be sure you don’t set an unrealistic holiday budget. The holidays are about having fun and making memories with family and friends, not about flamboyancy that can lead to long-term debt.
Are You Covered in the Event of a Data Breach?
Have you considered what would happen if your business was involved in a data breach? Gillman Insurance Problem Solvers are dedicated to helping the businesses of Fulton County, Georgia protect themselves from cyber threats. We have found solutions for all types of businesses in and around North Fulton, Roswell, Alpharetta, John’s Creek, Sandy Springs, Peachtree Corners, Duluth, Cumming, and Atlanta.
Watch this short video and see if this type of insurance coverage is right for you.
Secret Confessions of Anonymous Office Workers
Workers Compensation Insurance GA
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Secret Confessions of Anonymous Office Workers
If you could make an anonymous confession about your office environment, or workday, what would it be? New apps allowing users to share anonymous confessions have been exploding with popularity in recent months.
One app in particular, called Secret, lets people post confessions… and our metro Atlanta Insurance Problem Solvers have to admit… they are pretty entertaining!
A few of the office confessions shared by ibamag.com include:
1. Slowly coming to the unsettling conclusion that getting ahead in corporate society requires not telling stupid people the truth. – Portland
2. On a conference call. Thought I was on mute. I wasn’t. Good thing a lot of people called in. Anyone could’ve made those sounds. Anyone. – San Jose
3. Wearing Gryffindor socks to this job interview. – California
4. 10 of the most important people in my work/play life share at least one name. I’m terrified I’m going to email the wrong one. – New York
5. I’ve been secretly taking naps at work. It’s made me so much more productive. – Washington DC
6. The thing I fear most at work? Clogging the toilet. –Ohio
7. I think the receptionist judges me for the amount of online shopping I have delivered to the office. – New York
8. Every time I watch Mad Men, I wish it was still appropriate to drink at the office. – Friend
9. At work, I keep a secret list of bathroom non-washers. It’s on the wiki. – San Francisco
10. My boss told me to “Dress for the job you want, not the job you have.” Now I’m sitting in a disciplinary meeting dressed as Batman. – Nashville
It looks like none of these confessions came from our office, or the offices of our metro Atlanta Business Insurance clients, but only time will tell…. 😉
If you’re looking to share an anonymous confession, now you know where to go! But if you’re looking to secure better commercial coverage for less… you’re already here!
Contact us today for a free Georgia business insurance quote by calling 888.869.6509 or visiting Georgia Business insurance to request a quote online and learn about all the extra benefits you receive as a customer of our agency!
Find us on Social Media, call 678.297.7977 or get an online Cumming Georgia Insurance Quote
Classic Christmas Music Playlist
Alpharetta GA Auto Insurance
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Gillman Insurance Classic Christmas Music Playlist
Are you into the Holiday Spirit yet? Here at Gillman Insurance Problem Solvers we love to get a little silly and create playlists just for you.
Homeowners Insurance Guru Cindy Koegel chose “The Christmas Song” by Nat King Cole. “It just feels so peaceful and brings back so many fond memories of my childhood!” she said when we asked why she chose that song.
Deborah Stancel, who manages Non-Profit Insurance and Commercial lines chose “Santa Clause is Coming to Town” by Bruce Springsteen. “Who doesn’t love Bruce Springsteen?!?” she explained.
Karen Stetz, our APA Photography Insurance Problem Solver picked “Let it Snow! Let it Snow! Let it Snow!” by Andy Williams. “It’s so cheerful and uplifting. I have always loved the holidays, and I remember one year it snowed in Atlanta, Georgia. It was so magical!”
Eric Whitt who handles our Commercial and Business Insurance chose “Have Yourself a Merry Little Christmas” by The Pretenders. “This song is the quintessential holiday song for me. I love listening to it while we drive around looking at Christmas lights!”
Jennifer Treadwell, our resident marketing expert picked “It’s the Most Wonderful Time of the Year” by Andy Williams. “I love this song! This is our first Christmas in Roswell, and after a big move it helps to have those old Christmas songs by your side. It feels like nothing has changed.”
And finally, Ed Gillman chose “Jingle Bell Rock” by Bobby Helms. “This song really gets me in the holiday spirit!” he said.
Take a moment and listen to our handpicked Classic Christmas Playlist. We hope you enjoy it ad that everyone has a wonderful holiday season!
Click here to Listen to the Gillman Insurance Classic Christmas Playlist on our YouTube Channel!
Find us on Social Media, call 678.297.7977 or get an online Atlanta Insurance Quote
GA Police Let a Man Drive Away with a 0.126 Blood Alcohol Level
North Fulton County Auto Insurance
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GA Police Let a Man Drive Away with a 0.126 Blood Alcohol Level
Our Auto Insurance experts would assume–like most Georgia residents– that any person pulled over by Georgia police with a blood alcohol level of 0.126 would be arrested.
However, Mariano Saynez-Ruiz-Duran was pulled over last Friday with a 0.126 alcohol level, well above the legal limit of 0.08, and legally drove away.
Why? Saynez-Ruiz-Duran is the vice consular with the Mexican Consulate in Atlanta. Therefore, he was able to avoid jail at the time of the incident, but may face future DUI and speeding charges.
The diplomat, son of a Mexican Navy admiral, told police he had “two to three vodkas” roughly 30 minutes prior at the Tongue and Groove, a Buckhead nightclub.
This event concerned advocates of sober driving, in addition to many Georgia residents that expect police to keep roadways as safe as possible.
“Public safety is at stake, and [his case] should be treated like any other DUI case,” said Barry Martin, director of the Georgia chapter of Mothers Against Drunk Driving.
Roswell police spokeswoman, Lisa Holland, defended the officers by saying they would have arrested Saynez-Ruiz-Duran, but were advised by Diplomatic Security Service that the main could not be detained.
The Mexican consulate had no comment on the incident.
Find us on Social Media, call 678.297.7977 or get an online Atlanta Insurance Quote
Homeowners Insurance Pitfalls: Day 4 – Sewage Backup and Black Mold
This article concludes our four-part series on the pitfalls of homeowners insurance, but it covers an issue that Cindy Koegel, a Gillman Insurance Problem Solver, and homeowners insurance specialist, sees often in areas of North Georgia. We are talking about the unpleasant topics of mold and sewage backups.
Neither mold nor sewage backups are covered under typical homeowners policies, they must be added on as additional coverage.
Sewage Backup Insurance in Atlanta, Georgia is reasonably priced and can run you around $40-$50 per year. What could possibly cause a sewage back up? A number of things: an aging sewer system, combined pipelines for storm water and raw sewage, blockages due to tree roots, a blockage in the city sanitary main and basement flooding, to name a few. This unpleasant phenomenon can cause untold havoc should it get out of hand. For homes that are so severely damaged that they are uninhabitable, homeowners policies may provide Loss of Use Coverage, which may mitigate your damages even further. It is best to speak to an insurance agent to find the right policy for your needs.
Mold Insurance can protect against a huge threat to the safety of the occupants of your home. Within 48 hours of water coming into contact with drywall, dangerous black mold spores start to form. Getting rid of those spores requires expertise and caution to keep them from spreading. Mold removal and restoration can be quite expensive to ensure a safe living environment. This is not typically covered under a standard homeowner’s policy, and many people do not realize this until it is too late, and they are having to pay out of pocket for professional mold removal. In the past decade or two, homeowners have experienced huge problems with older stucco exteriors that, over time, create the perfect breeding ground for mold. If you live in a humid area (like Atlanta!) or if you live in an older home that was not built with mold resistant materials, you may be at risk, and mold insurance could be a worthwhile expense since the cost of removal is so high.
For more information on this and other issues, please contact Cindy Koegel, a Gillman Insurance Problem Solver who specializes in homeowners insurance policies in North Georgia at 678-297-7977, or you can request a free quote here.
This article has been part of a four-part series concerning the pitfalls of homeowners insurance, and how to avoid them. To read previous articles please check out our blog posts on Jewelry and Scheduled Personal Property Insurance, Replacement Cost Estimators, and Flood Insurance.
Homeowners Insurance Pitfalls: Day 3 – Do you Have Flood Insurance?
Learning that flood insurance is not part of a standard homeowners contract is a shocking revelation once your house is full of water. “So many people in John’s Creek, Roswell, Cumming, Sandy Springs, Duluth, and Alpharetta just assume that since they aren’t near a large body of water, that flood insurance isn’t necessary,” says Cindy Koegel, a Gillman Insurance Problem Solver.
“This is a huge problem for uninsured families in Atlanta, Georgia when hurricanes hit the coast many miles away.”
Coastal area homes aren’t the only ones that need flood insurance. Homes that are hundreds of miles away from the shore can sustain an exorbitant amount of damage from rainwater or ground water, especially during a bit of nasty weather. The good news is that flood insurance is not hard to get. Flood Insurance is provided under a federal program that accepts everyone who wants the coverage.
What to do:
You should first determine your flood risk by visiting the National Flood Insurance Program’s website, floodsmart.gov. Other factors to consider when assessing your risk of flood include the grade of your yard and whether or not your home has a basement. These factors could make you a higher risk for flooding.
Call your insurance agent today. No, really, because there is a thirty day waiting period between the day you buy a policy and the date your coverage begins. This ensures that people don’t call for coverage once a tropical storm is already in sight, and rewards those who have held onto their coverage for the long haul.
The price of flood insurance varies, but you could pay as little as $5.00 per month for above-ground, contents-only coverage in a low risk area.
For more information, contact Cindy Koegel, a Gillman Insurance Problem Solver specializing in homeowners insurance policies. Since Cindy is not tied to one insurance carrier, she is able to create a customized homeowners policy that fits her client’s needs. Call (678) 297-7977 or get an instant quote.
This blog post is part three of a four part series on the common pitfalls in homeowners insurance. Please see our blogs concerning Scheduling Personal Property Coverage in North Atlanta, Mold and Sewage Backup, and utilizing Replacement Cost Estimators in Georgia.
Homeowners Insurance Pitfalls: Day 2 – Will Your Jewelry be Replaced?
Every basic home insurance policy comes with some personal property coverage, but your average homeowners policy will not cover every type of property and often limits the amount it will pay out for certain types of losses.
Cindy Koegel, a Gillman insurance Problem Solver, sees this commonly create issues with fine jewelry that is lost or stolen. “In the event of a loss, say your house burns down or a valued piece of jewelry is stolen, many people think their homeowners policy will cover the full value of the jewelry, but that just isn’t so.”
She goes on to explain that often jewelry is subject to a value limit (think $2,500) and requires that the homeowner pay their deductible. “If your deductible is $1,000,” explains Cindy, “then really you’ve only received a pay out of $1,500 for a piece of jewelry that could be worth a lot more. That is why I always recommend that people schedule their jewelry.”
“That is why I always recommend that people schedule their jewelry” -Cindy Koegel
What is scheduling? Scheduled personal property is an endorsement that can be added to your homeowners insurance coverage, ensuring that you receive back the value of that piece of property in the event of a covered loss. People often schedule fine furs, antiques, paintings, guns, and yes, expensive jewelry.
Scheduling an item requires an appraisal first and foremost. You will then submit the appraisal to the insurance company with your request to have the item scheduled on the policy. Once your insurance company agrees to the value of the item, they will endorse the item and add it to your homeowners policy.
Scheduled Personal Property offers three advantages over a standard homeowners policy:
- Scheduled items are covered based on a replacement cost value that has been predetermined. This means that the value of the item is not subject to depreciation based on the age of the item. You will receive a payout that covers the real cost of replacement based on the appraisal that was previously submitted.
- Scheduled items are covered under more causes of loss. You can effectively gain coverage in the event of almost any type of loss, unlike a standard homeowners policy which may only cover a handful of standard perils. This means that even if you misplace a piece of jewelry, you can file a claim.
- Scheduled items are not subject to a deductible. You are not responsible for paying any deductible on your item, which means all of the insurance money can go to replacement.
Be aware that most insurance companies set a limit on scheduled personal property coverage. Any items that you wish to insure which would exceed the limit would need to be insured under a separate policy. It is always best to talk to a trusted agent when making financial decisions.
For more information, call Cindy Koegel at (678) 297-7977 or you can email her at cindy@gillmanins.com.
This post is part of a four-part series on homeowners insurance pitfalls. See our previous post about Replacement Cost Estimators, Flood Insurance in Atlanta and Mold and Sewage Backup Coverage in Georgia.
Homeowners Insurance Pitfalls: Day 1 – Two-Thirds of Homes are Underinsured
Homeowners Insurance is designed to provide peace of mind when disaster looms, but some people will find themselves underinsured without the proper guidance from a trusted agent. There are so many questions about what coverage is available and what it specifically covers, that many people find themselves in a pickle when they need to file an insurance claim.
Insurance experts say that failing to have enough insurance to cover the cost of rebuilding your home is the absolute biggest mistake homeowners make. One 2009 study found that two-thirds of homes are underinsured.
How could this happen? Unfortunately, many homeowners only buy enough insurance to cover the amount of their mortgage. Many people don’t consider that your mortgage may be, at most 90% of the value of the house depending on down payment and appreciation. (See our article on construction vs. reconstruction costs)
Anther pitfall is to only insure an amount equal to the current value of their homes, but the cost of rebuilding your home could cost far more money. Consider that in the event of a natural disaster, both the cost of labor and supplies spike in a market desperate to rebuild.
“So many people don’t consider the cost of clean up in case of a natural disaster. Just clearing the land of debris can cost as much as $50,000!” -Cindy Koegel, Gillman Insurance Problem Solver
What do to:
Always use the replacement cost estimator provided by your insurance carrier. This estimator determines how much it would cost to rebuild your home, and makes sure that your insurance coverage is adequate for a full replacement.
“I get so nervous that people don’t understand the value of having a replacement cost estimator,” says Cindy Koegel, “Regardless of what you paid for your home, you want to insure it for its replacement cost value (determined by the estimator). If your homeowners policy provides coverage, which is less than the estimated value, you may still not be able to restore your home to its original state in case of a disaster. The Replacement Cost Estimator asks you questions about your home and can add an additional endorsement of up to 25%. So that designer kitchen you just installed with high end appliances? It doesn’t have to be replaced with builder’s grade in case of a covered total loss.”
For more information, contact Cindy Koegel, a Gillman Insurance Problem Solver at (678)297-7977 or email her directly.
This Blog Post is part of a four-part series on the pitfalls of homeowners insurance and how to avoid them. To read additional articles on the topic please check out Scheduled Jewelry Insurance Coverage, Flood Insurance in Georgia, and Mold and Sewage Backup in Atlanta.
