Real Construction Cost
The real construction cost that the insurance companies don’t disclose… when you find out it may be too LATE!
Most business owners, don’t understand the difference between Market value, new construction and replacement cost. There is a difference between new construction and reconstruction. What can you do to make sure your business or commercial building is adequately covered in the event of a loss? Find out what the real construction cost is before disaster strikes.
Should fire, flood or any natural disaster strike your business or commercial building your real construction cost should be defined by a qualified accredited appraiser that is a construction expert as well as a 2008-2009 USPAP compliant appraiser.
- Market Value for your building is defined as “the value that a willing buyer and a willing seller will exchange the property for in an open non-distressed sale”. This does not apply to the real construction cost that it will take to replace your destroyed business building.
- New Construction cost will cover just the building, no demolition or landscape cost.
- Replacement Cost is vague in definition and had a maximum that the insurance would pay as of the date of the contract. No consideration was given to the real construction cost. Replacement Cost will fall short of your needed rebuilding funds.
- If your building has been damaged or destroyed by disaster you will need a demolition team to remove and dispose of the debris before new construction can start. This cost usually is not included in your “replacement cost” insurance.
Before you start construction you are in a negative balance to rebuild your business building according to your present insurance policy. - WHAT IF THERE IS NOT ENOUGH MONEY TO REBUILD? Can I just take the insurance money? Yes you may take the Cash Value of your building replacement insurance… but, there is usually a hidden clause to only pay you half the insured amount!
- Real construction cost have been refined since 9-11. This national disaster eventually raised all insurance rates because of the magnitude of loss and the lack of real construction cost factored into the insurance policies. Real construction cost is the only answer to restoring your business and the building.
Contact Paul Fussell Valuation for a real construction cost appraisal.
- Accredited Senior Professional Appraiser - N.A.P.A.
- 2008-2009 USPAP Compliant
- Graduate of Architectural Drafting and Design
- 29 years Licensed Commercial Contractor
- Phone 480 326 3907
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March 8th, 2008 21:11
[…] There are a wide variety of questions involved with demolition to give a good answer. Are there environmental issues? Asbestos? Buried fuel tanks? Chemical spills or even tar run-off from burned tires? What are you intending to do with the debris? Can any portion of the foundation remain or will you require everything to be removed? Is there anything salvageable that might have value and offset the costs? What is the construction method? Does demolition include removal of asphalt or just the building? Is site restoration part of the project? The demolition of certain parts of a building and equipment does not necessarily involve destroying the entire structure. Sometimes, the exterior/interior walls, floors, equipment and ceilings may not be damaged. There are also many issues in real demolition costs that you really have to take them on one at a time. You can’t see these demolition costs when you are thinking about purchasing insurance for your building, but you might want to consider some of the issues described in this article to keep you aware of demolition costs as part of your real construction cost. The cost of most demolition permits is relatively inexpensive running between $15 and $25. Sometimes, there are additional fees in demolition for things such as inspection of the power disconnection and to cap off water and sewer lines at the property. In addition, a permit for encroachment may be necessary to abandon the sewer line at the main. A licensed plumbing contractor will be needed for this. Municipal fees may be collected if the property will be developed in a timely manner. The water will have to be shut off at the property boundary. However, if the property will not be developed after demolition, you can shut off the water at the main. How does this apply to you? You need Official Asset Appraisers to examine your particular situation to determine the demolition costs which you will require in defining your real construction costs. Otherwise, you could be spending too much money on premiums, or not enough. Either way these issues will be covered when you call Official Asset Appraisers to answer your questions, and appraise your building for the Real Construction Cost. […]