Level of damage
Sometimes, homes are completely destroyed and must be rebuilt from the ground up. “However, in many cases, the entire structure does not need to be rebuilt,” says Andy Lindus, COO at Lindus Construction in Baldwin WI. “Depending on the quality of the home build and the material used, it is frequent to find that homes are primarily in need of the replacement of exterior features.”
Lindus defines these as repairs to the roof, gutters, windows, and decks. “At times, interior drywall repair may be necessary due to impact from large debris hitting a home during a tornado.”
His company has been in western Wisconsin and Minneapolis/St Paul for 40 years, and Lindus says most homeowners who experience tornado damage opt to make home repairs and continue living in the same space. “In many cases, homeowners use a severe storm as an opportunity to make additional upgrades to their home that they had been contemplating, but had not yet opted to do.”
To accurately determine how much damage the house as sustained, Robert Himmaugh, manager at Acadian Windows and Siding, in Kenner, LA, recommends having a registered design engineer assess the damage to see whether it can be rebuilt or if it’s better to move on.
If it can be rebuilt, the next step involves your insurance.
Your home may be uninhabitable for a while. Image: J Bicking/Shutterstock
Your insurance coverage may play a significant role in whether you rebuild or move on. Heather Sims at Ebby Halliday Realtors in Dallas TX, helps buyers purchase fixer-uppers, and she says there are 2 essential insurance questions that need to be answered. “Do you have enough insurance to rebuild your home to the standard that you would want? If this answer is yes, then you have the financial freedom to make decisions without too much financial concern.” In this scenario, Sims agrees with Himmaugh that you could rebuild the home and make it even better than before.
However, if you don’t have enough insurance to rebuild to the pre-tornado level, Sims has another question. “Do you have enough insurance to sell the remainder of the property, take the insurance money, and then rebuild or buy a home elsewhere with those combined funds?” Again, if the answer if ‘yes,’ she says you have more freedom to decide. But if the answer is ‘no,’ Sims says rebuilding is probably your best choice. Keep in mind that unlike buying a fixer-upper, you won’t be fixing the home at your own pace. You’ll need to get it to a livable status in a short period of time.
Not all storms are covered by insurance. Image: Terry Alexander/Shutterstock
Coverage and cash settlements
According to Stefan Tirschler, Product + Underwriting Manager at Square One Insurance Services, in Vancouver BC, which specializes in home and renters insurance in Canada and the U.S., you should always select a limit of coverage that will be sufficient to cover the cost of rebuilding your home after a total loss.
“Most homeowner’s insurance policies cover damage caused by wind. However, most home insurance policies don’t include coverage for inland or coastal flooding,” Tirschler explains. “If you live in a region where flooding may occur, it’s important to purchase a flood insurance policy.”
Your mortgage payments are still due after a tornado. Image: Brian A Jackson/Shutterstock
Also, if you’re considering accepting a cash settlement from your insurance provider, Tirschler says it’s important to carefully consider how much you’ll receive. “If you choose to ‘cash out’ instead of rebuilding the home, many home insurance providers will offer a settlement equivalent to the value of your home less depreciation, which can vary significantly depending on the age and condition of your home.” As a result, he says you might receive far less in a cash settlement than you would if you rebuilt the home instead.
And here’s something else to consider: “The mortgage company doesn’t absolve you from the debt because the home is destroyed,” warns Christi Houser, agency manager with Country Financial in Clackamas, OR. “You will need to continue to pay your mortgage even if your home is uninhabitable.” Fortunately most policies include a benefit for additional living expenses, and Houser says this will cover the cost of a place to live while your home is being repaired or rebuilt.
“This coverage generally includes the extra cost of other living expenses -such as eating out at restaurants or having laundry done – that you would not have incurred had you not had the covered loss. Insurance is designed to make you whole again,” Houser says.
Don’t make rash decisions. Image: Vizual Studio/Shutterstock
But level of damage and insurance aren’t the only factors that Sims believes you should consider. There are also emotional considerations. “Do you have time to avoid making a quick decision? This would be the case if you have insurance that provides money for you to rent a living space somewhere while you decide what to do.” Your house is a safe haven, and when it’s been damaged in a storm, you need time to absorb that emotional impact. Sims says this is an important step before making a final decision regarding rebuilding or walking away.
“What do you want in your core?” Sims says this is what she also asks buyers when they walk into a home. “If it’s ‘the one’ for you, there will be an immediate gut feeling and sense of belonging. “Will you be able to feel safe, secure, and ultimately happy in the same location and home, or is it best for your emotional health to walk away and make your home in another space that doesn’t have any sort of negative feelings attached to it?”
Understand all of the costs. Image: Vizual Studio/Shutterstock
If you decide to rebuild, and you’ve received estimates from your insurance company, Himmaugh says there are other steps you also need to take. For example, building code upgrades should be reviewed. “Don’t go into a project blindly and expect to stay in your budget. Talk with your local building department, and contractors so you can properly plan before you consider rebuilding.”
The right contractor makes all the difference. Image: Pu kibin/Shutterstock
Choosing a contractor
“It’s important that you choose a contractor you trust because when rebuilding your home, you, the contractor, and the insurance company will all have to work together,” Himmaugh says.
“The cost of building materials can become expensive, so you’ll want to talk with both your contractor and insurance company to see what will be covered in your policy.” For example, if your roof has completely caved in, he says the amount of money you’ll need to fix it often isn’t worth the amount you’ll get in coverage. “Talk to your contractor and assess the damages to see if you can save more money by moving on to a new home.”