Mavco Insurance Agency, Inc. (630) 655-2410
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February 2013
Residential Reconstruction
Cost Review

Replacing or reconstructing a home is a challenging venture, but it can be made easier when you know the whys and hows of residential reconstruction. Knowing how to get it done — and done right — is key to effective residential reconstruction. What follows is a Mavco primer on the subject.

Mavco is committed to helping you understand how your insurance protects your assets, including a replacement home.
Call 630-655-2410 anytime to discuss your personal asset protection.

What residential reconstruction includes. The term “replacement cost” refers to matching the features of your residence in today’s marketplace. Replacing a home to the same specifications as the original residence requires planning for the following:
  • Labor and Materials. Your home should match your former residence in the quality of materials used to build it, and also in the quality of construction.
  • Builder compensation. A reasonable profit for the builder will be included in the price of reconstruction. Generally this is 20%, but terms may vary.
  • Overhead expense. Very few projects go precisely as planned, which may mean allowances for additional cost.
  • Regulations. Licensing, fees, filing charges, permit and impact fees must all be factored into the reconstruction bid.
  • Insurance and taxes. Coverage against damage and liability is required, as are possible escrows or prepayments for taxes associated with reconstruction.
  • Design and engineering. Architect, engineering and consulting fees.
  • Code upgrades. Sprinkler systems, glass, non-combustibles, foundations and roofing are just some of the home components subject to code changes.
  • Interior decorating. Everything from window treatments to light fixtures.
  • Add-on upgrades and electrical. Any changes or upgrades to the original home that must be factored in, such as cabinetry, lighting, alarms, home theater, lightning suppression and other improvements.
  • Additional considerations. Fluctuating cost of materials, fuel to run equipment, time constraints imposed by the city, village or community all can affect the end price of a project.

Flooding Not In the Policy

It’s a fact, regular homeowner policies do not cover flooding. Yet millions of Americans find themselves at risk of damaging floods.

According to, flooding is not only the most common natural disaster in the United States, it also costs homeowners plenty, most of whom have no flood insurance.
  • Floods are the most common natural disaster in the United States
  • Between 2002 and 2011, floods caused $2.9 billion in damages and loss per year
  • There is a 26% change of flooding during the life of a 30 year mortgage in high risk flood areas
  • also recommends that major appliances, electric switchboxes, outlets and heating equipment be kept well above flood levels
Learn more about flood insurance for your home
Mavco is an independent insurance agency located in Hinsdale, Illinois. We provide personal and business insurance solutions, and specialize in supporting the complex needs of high net worth individuals and their families.

Meet the Mavco team. We offer a level of care and attention that cannot be matched.