Should You Rebuild Your Home After a Disaster?

Illustration of a home that is sitting in a circle that’s protecting it from flooding, fire and other natural disasters.

When disaster hits and your home is destroyed or damaged, it’s time to decide if you want to rebuild or walk away.

Natural disasters can be over relatively fast. The earth stops shaking. The flood waters recede. The fire is extinguished.

But for those whose homes are damaged or destroyed, the end of the disaster marks only the beginning of the recovery. For many, the big decision of whether to rebuild their home looms large: the decision must be made fairly soon and under stressful circumstances that can include homelessness.

“You’re trying to make a very emotional decision while you’re dealing with what’s happening to you and your family,” says Kim Hibbs, owner of Hibbs Homes, a custom new-home builder in Chesterfield, Mo. “Many times, you’re living out of a hotel. You have no clothes. You could be depending on the Red Cross for a while. Sooner or later, you have to make a difficult decision: Are we going to move or are we going to rebuild?”

For some, the decision is easy. They’ve spent most of their lives in their home and they’re determined to return and stay. For others, the decision is not as clear. Emotions run high. Family members disagree. Insurance can be a complicating factor.

A Lifetimes of Memories

The decision to rebuild begins with how much the homeowner valued the destroyed home, says Regan Youngs, director of business operations at BMR Homes in Homewood, Ala.

“People want to stay because they’ve lived there for 20 years, 40 years. They have all those memories. They’ve built their lives there,” Youngs says. “Are they OK with leaving those memories for somebody else?”

Financial Factors

Much of the decision may be driven by the homeowner’s insurance company and coverage, Hibbs says. A policy that includes replacement cost, building code upgrades and temporary living expenses can make rebuilding easier.

The cost of building materials also matters, especially if there’s a large gap between what the insurance company will pay and the homeowners’ expectations and dreams for their new home.

Post-disaster rebuilds often turn into remodeling jobs because homeowners want to upgrade rather than just replicate, Youngs says. Sometimes, upgrades can be shoehorned into the budget by making tradeoffs. Other times, homeowners spend more out of pocket to enhance their new home or at least bring it up to current building codes.

The decision to rebuild begins with how much the homeowner valued the destroyed home. — Regan YoungsThe costs of building materials can come as a surprise.

“Prices fluctuate constantly,” Youngs says. “It’s nicer quality — really great stuff, but people don’t have a concept of how much things cost. A custom-cabinet kitchen is going to cost a lot more than what your pre-existing cabinets were worth.”

Again, insurance may be adequate — or not.

Hibbs says homeowners who want to rebuild should choose a contractor they trust and that is comfortable talking to their insurer. The homeowner, builder and insurer will have to work together to make sure the rebuild turns out well for the homeowner’s family.

Mitigating the Risk

Another consideration should be whether the risk of repeated disasters can be mitigated during the rebuilding process, says Richard Frazao, president of Quaketek, a company in Montreal, Quebec, Canada, that manufactures seismic friction dampeners.

Some homes suffer disasters rarely. Others are flooded every year, are built on active earthquake fault lines or prone to hurricanes or other seasonal disasters.

“If the risk is recurring and significant enough, then before you rebuild or repair, you need to take measures to reduce the risk,” Frazao says.

He advises homeowners to put all their options down on paper and compare the costs, as well as the probability factors of the risks in each scenario.

“With this information you can at the very least make an informed decision, but you can’t ignore the risk of recurrence,” he says.

Happy Ending After a Tornado

2017 was an historic year for natural disasters, according to the National Oceanic and Atmospheric Administration, an arm of the U.S. government. During the year, the country experienced 16 separate billion-dollar disasters, tying 2011 for the record for a calendar year. The total cost of 2017’s disasters hit a new record: $306.2 billion. Three hundred and sixty-two people died. Tens of thousands of homes were destroyed.

Rebuilding is possible.

Hibbs recalls one family whose single-story ranch home in the St. Louis area was sliced in half by a tornado in 2011. His company built a two-story replacement home for them with more space and greater energy efficiency.

“It had a happy ending,” Hibbs says. “They loved their neighborhood and their neighbors. They chose to stay. They had their house rebuilt and the insurance covered everything.”
Marcie Geffner is an award-winning freelance reporter, book editor and blogger whose work has been published by a long list of financial, mortgage and banking websites, trade magazines and newspapers. You can find her on Google+.

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