High Value Home Replacement Cost
Ever wonder what goes into calculating the replacement cost of a high value home? Here is how Chubb explains the process:
Establishing the value of the home
Making certain that a home is adequately insured for the full cost of reconstruction is one of the underlying tenets of Chubb's commitment to each insured. Each year, Chubb undertakes a rigorous process to ensure their estimiated reconstruction costs are in line with current construction pricing, including:
- Analyzing residential construction cost data from over 2,000 data points in 731 locations across the US, tracking residential construction cost trends from 26 material and 13 labor inputs;
- Reviewing cost trends for key construction components using national data from the Bureau of Labor Statistics, RSMeans and Marshall & Swift/Boeckh;
- Conducting interviews with local high value home builders;
- Engaging their Claims department to make sure they establish replacement costs that are in sync with the types of claims they typically pay after a loss.
What goes into calculating replacement costs?
Many factors must be considered when rebuilding, such as:
- Materials and Labor Costs - Prices of building materials and construction labor continue to rise. In the last 12 months, the cost of items such as concrete, custom cabinetry, windows & doors, light fixtures and wood siding have risen between 2 and 4 percent. Labor has gone up approximately 3 percent.
- Quality - Chubb hires skilled craftspeople who will restore your insured's home with the same quality materials and detailed work as before the loss.
- Speed - Chubb's goal is to get you back into your home as quickly as possible, so they often pay a premium price for contractors.
What does this mean to your insured?
Given all of this, it is important to be sure that your client's home is insured to its full replacement value. If you're concerned that a home may be underinsured, please contact us to arrange a new Chubb appraisal. Remember to review coverage with your insureds at least once a year. Even a small renovation could potentially render the amount of coverage too low.