Should We Rebuild After a Disaster or Walk Away?

One of the hardest decisions a homeowner can be faced with is whether or not to rebuild their home in the event a natural disaster has severely damaged or destroyed it. Homes are different than most assets; they can hold decades of memories that are hard to walk from. And then there’s the cost. Rebuilding or outright replacing a heavily damaged home is an enormous decision that will probably depend on the type of homeowner’s insurance you have in place.

Types of Homeowner’s Insurance

Homeowner’s insurance is designed, as the insurance industry puts it, to “make you whole” again. There are sundry riders, amendments, exclusions or exceptions that might be included in an insurance policy, but whether or not they actually make you whole will depend on the type of policy you have. In general, homeowner’s insurance comes in two (2) flavors:

Replacement Cost Policy

While premiums will be higher for a replacement cost policy, this is the type of coverage that will come closest to making you whole. It will cover the full cost (minus the deductible) of returning your home to the state it was in prior to the event that inflicted the damage.

Actual Cash Value Policy

A cash value policy will provide coverage up to the depreciated value of the home, minus your deductible. The operative word here is depreciated. Your home’s value begins to depreciate after you purchase it, just like an automobile. Here’s the good news: the value of the land on which your home resides is considered an appreciating asset. Why? Because land is in limited supply. In the Dallas/Ft. Worth Metroplex, which has grown by approximately 150,000 people in each of the past five (5) years, owning land means you’ve made a very good investment. You own something that’s in limited supply and, because the population continues to grow, the demand becomes greater every day.

Do I have to repair my home with the insurance settlement check?

What you do with an insurance claim payment is up to you, not the insurance company. But, you might find that the cost to repair or replace your home is more than the amount the insurance company has provided. At that point, you are faced with a decision. Do you rebuild anyway, financing the additional cost?  Depending on the depth of your roots in the area and the nature of the event that damaged your home, this may or may not be a palatable idea. Some find the thought of leaving their homestead after a disaster unthinkable.  Others find the unpleasant memories of a terrible loss–plus taking on additional debt to rebuild–to be more than they can bear.  Those in this situation are better off selling what remains of their home and the lot it stands on to a home investor.

If you’re determining whether to sell your home because your insurance settlement won’t make you whole, contact the professionals at They will come view your home and make a cash offer on the spot. To set up an appointment, call them today at (972) 643-8320.