"But my home didn't cost that much to build new." This is a common statement made by customers when they are presented with a reconstruction estimate that is higher than what they paid to build their new home. How is it possible for the numbers to be so different?

1. When a new home is built, it may be part of a new neighborhood of homes, which means the builder is building multiple homes at one time. This allows for economies of scale - bulk material cost and bulk labor costs mean that it can be less expensive to build a new home as part of a larger development.
2. Building a home from the ground up is very different than reconstructing a home. After a loss like a fire or tornado, there may be sections of the home that are undamaged, which means that the damaged sections must be hand demolished and rebuilt around the rest of the structure. Fire damage 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 is significantly more labor-intensive and specialized than a new build. Demolition, debris removal, code compliance and other fees also add to reconstruction expense.
3. Timelines: When a new home is built, it's typically done on a normal, extended timeline that takes into consideration the builder's other projects, weather, materials availability, etc. When a customer has a large loss, the timelines are shortened considerably. This is because the insurance carrier wants to get the claim paid, and the customer wants to get back into their home. In this case, a builder may need to hire extra workers to complete the job faster. He may also need to work in less-than-ideal conditions. For example, if a home needs to have stucco applied, it would normally be done in good weather. But a house being reconstructed in middle of winter in Minnesota can't necessarily wait for good weather - so the reconstruction builder would have to tent the house and complete the stucco work in a controlled environment - all at a higher cost.