Insurance Lessons From the Colorado Fires

Colorado residents have again seen their share of wildfires. A recent opinion in the Denver Post highlights a widespread issue that is not specific to wildfires. Many homeowners would simply not be able to rebuild if they experienced a total loss of their home. The author of the linked article states that in 2010, more than half the people who lost their homes learned the hard way that the cost to rebuild their homes exceeded the market value. Here is a link to the article: http://www.denverpost.com/opinion/ci_20965458/updating-insurance-laws-wildfires

Mercer Island has similar factors. Access is always a question for those homes on slopes or with narrow lanes leading to them. Some waterfront homes need to have materials barged in. Many new building codes have been added in the past few years in King County that may increase the cost to rebuild. These factors are nothing new, but increased insurance costs and/or lack of awareness cause many to have under-insured homes.

We can all start with common sense. A few years back, I contacted a local builder who wanted $150 a square foot to build a similar new home to mine with a pre-designed home plan. I know that some insurance companies estimate that the cost to actually rebuild after a fire is 30 to 40% higher than new construction. This puts me at over $200 a square foot. So what about higher end construction or plans that need an architect? I finally found a local high end builder who would talk to me about the topic. He stated that many of the higher end homes in the local area would be between $300 to $1000 a square foot to rebuild and it all depends upon the materials used inside.

As an interesting aside, there are select insurance companies who offer fire protection services in certain zip codes of CO and CA. They will monitor and gel coat your home if in danger. Supposedly, this fire retardant was first developed from a baby diaper's absorbent polymer technology as a fire fighter observed that it was the only item that did not burn in a trash fire. I am not sure about this story but photos of saved homes in the Los Angeles area are amazing.