As the reconstruction costs will be determined? – Another common area of??Misinformation for owners on how determined the cost of rebuilding a property of the actual insurance. Contrary to popular belief, is not simply a “blind guess” as the cost of replacing the property? This formula is a bit complex and may vary slightly from one company to another depending on the data points are used, but the process (below the simplified) is usually the same. Most businesses in the United States pay a lot of money each year to full access to Marshall & Swift / Beck (MSB) database structure has.
This is an experienced and respected outside firm, the exact construction costs (materials and labor) maintains for each zip code only in all counties in the United States. This database is updated every 90 days and is usually very accurate. Can when applying for a new quote for insurance agent to ask many questions about the physical characteristics of the property, such as square footage, number of stories, and type of construction, roofing materials, and exterior wall material used floor coverings, etc. The purpose of these questions is to accurately understand how your property is constructed so that this information is entered into the software company reconstruction costs. Once these data have been obtained and entered into the system, the software works with the MSB database to compare the cost of labor and materials in the area and determine a fairly accurate picture of what is expected cost of rebuilding the property in the current labor and material cost prices.
The reason why two different companies can have two completely different cost of rebuilding, even if you have the same data with how the company calculates its own internal cost estimates, do not the MSB database. For example, the company ‘A’ to develop a reconstruction cost of $ 100,000, but in its internal calculations, an additional 20% of wage costs, 5% for “indirect costs”, and 22% of add materials, while the company ‘B ‘uses only the direct costs of Marshall & Swift / Beck provided. The purpose of this is to err on the side of caution and seek an additional margin for unforeseen variations in actual costs to compensate for a loss. Each formula reconstruction costs have ownership of the company and agent no clear idea of??How each company estimates the final cost or what the margins are included. All agents have access to the estimated ultimate cost of replacement.
Can two properties built exactly the same have different costs of reconstruction? Of course! Labor and material costs can vary widely from one geographical area to another. For example, here in Texas for a home in El Paso, a replacement cost of $ 150,000, or reconstruction, however, that the same house with the same size and physical properties. Replacement cost of $ 210,000 in rebuilding Houston The reason for this, as already mentioned, due to the local building codes, labor costs, material costs, and other issues.