Roadblocks to Resilient Construction After a Natural Disaster

The New York Times and Rolling Stone magazine, among others, have reported insurers refusing to offer new wildfire policies in California, forcing homeowners there to purchase secondary market insurance that can bump their annual premiums from $3,000 to $13,000, says Brian Flahavan, a partner with Synergy Group by Christopherson, a “rebuilder” in Santa Rosa, Calif.

Steven Steckler, president and partner with Sentry Claims Group, a claims adjuster in Lafayette, La., says his firm is seeing a big increase in catastrophic claims for damages from mudslides, fire, earthquakes, floods, and hurricanes. But to keep premiums low, he adds, insurers have been raising deductibles for such coverage “through the roof.” 

He also notes that while the federal government is the insurer of last resort out of necessity, federal flood insurance is limited in what it covers and what it will pay out. “At some point, the ability of governments to bail out communities isn’t going to be there,” predicts Alex Wilson of the Resilient Design Institute. 

Even if insurance would make a homeowner whole again after a disaster, getting a house rebuilt can be challenging in markets where labor and building materials are in shorter supply.

The North Coast Builders Exchange, a contractors’ association, recently estimated that wildfires in northern California have caused construction costs to double. While builders thought that estimate sounded high, they acknowledged that their construction costs have risen by 10% to 40%. 

“Since the Tubbs Fire, costs have spiraled out of control,” says Dan Freeman, owner of Lenox Homes, in Lafayette, Calif. Subcontractors are in the driver’s seat, he says, because they have so many bids on their tables.

“Everyone is building at once, and because of the labor shortage, we haven’t been able to hold onto anyone new for more than two pay periods,” says Eric Keith, COO of North Bay Environmental, a Santa Rosa builder that, as of October, had completed 13 rebuilds, with 11 more under construction.