|
|
| |
How
to Obtain Continuing Education Accreditation from this
HyperArticleTM
Upon completion, this
HyperArticleTM grants the
following Continuing Education (CE) credits:
- Level 1 Brokers -- 1 Technical Credit
towards a General Insurance license only
- Level 2 Brokers -- 1 Technical Credit
towards a General Insurance license only
- Level 3 Brokers -- 1 Technical Credit
towards a General Insurance license only
To qualify for these CE
credits...
- Read each section of the article carefully and in numerical sequence
- Click on the hyperlinks provided to access supplemental information and
be sure to read all information listed as Mandatory
reading
- Successfully challenge the quiz to demonstrate your
learning
- Save and print your personalized
Completion Certificate.
|
|
|
| 1 |
Introduction
Home Construction from the Bottom Up
[Original article
appearing in the BC Broker
magazine - February
2009.]
This article is ideal for entry-level to intermediate personal lines
brokers, and an excellent review for more senior
brokers. 
by Debra
Fitzsimmons,
CAIB
Debra Fitzsimmons, CAIB is the office manager for
Seafirst Insurance Brokers on Salt Spring Island. She has been facilitating courses and
seminars for IBABC since 2005.
During my early years as a broker,
calculating the insurance value of a home was simple because there was just one method
that consisted of a few basic questions. Even then the knowledge I had gained about
construction while building two of my own homes proved to be an asset in determining
adequate coverage for clients' homes.
How things have changed over the past
decade. Brokers today need to know more about building construction than ever. We must
engage our clients in a lengthy examination of their dwelling construction -
details that can challenge even the most informed homeowner. Evaluators no longer just
require the square footage, number of bathrooms and roofing material, but details of the
framing, types and style of roof construction, the size and detail of specialty windows
and sky lights, and the difference between cast and block foundation. In order to
complete an evaluation the broker must be able to explain and rationalize the question to
the client and interpret the answers the client provides. To complicate things further,
the options of home construction materials available today are as varied as the
homeowners themselves. It's helpful to know what's standard, or
'builder's grade', and what's custom. And to keep things
interesting, some construction terms and assumptions vary from one calculator to
another.
Knowledge of the order in which
construction is done helps a broker when providing coverage for dwellings during the
course of construction. If a loss occurs at a certain point - say, when doors and
windows are being installed - a broker then has a general idea of the stage of
completion and what materials are on site.
So let's start by looking at
how a typical home is built, from the bottom up...
|
|
|
| 2 |
Soft
Costs
Pre-construction: House plans are reviewed and approved; cost
estimates, financing and building permits are arranged and confirmed.
Coverage considerations:
For valuation purposes the style (e.g., Cape Cod, Rancher, Colonial) and size (square
footage, number of floors) are among the major determiners of value. The style will
indicate the presence of details like gables or dormers.  The style of the house can determine the foundation type; slab, crawl space or
basement. For example, a split-level home could have both a crawl space and a basement.
The square footage, along with the number of levels, can have a bearing on reconstruction
costs because it's less expensive to build up than to build out as there is less
foundation required. The size provides a clue as to whether the finish is builder's
grade or custom; the general assumption is that larger homes tend to have higher-end
finishes.
Site planning:
Site is studied to ensure the house will be well situated on the property in relation to
the property lines, sunshine, wind, trees and shading, elevation and site
drainage.
Coverage considerations:
The dwelling's position on the property is not usually an issue when filling in a
valuation calculation, but it does potentially have an important bearing on
reconstruction. If the dwelling is non-conforming to municipal bylaws or legally
non-conforming (it did conform at one time, but bylaws were passed after the home's
construction that now make it non-conforming), in the event of a total loss, that
non-conforming status could prevent it from being built on the same footprint. Two
examples of non-conforming status would be proximity to a fish-bearing stream or a steep
slope that was found to be potentially unstable.
Optional
reading:
Mandatory
reading:
|
|
|
| 3 |
A Solid
Foundation
 Layout of building: The layout
of building, including the depth and placement of the foundation, on the property is
determined, observing bylaws regarding setback and property lines. This stage allows for
the management of drainage, snow accumulation and view.
Excavation and
footings: Forms for the building's footings are placed for the layout of
the foundation walls and columns in preparation to construct the
foundation.
Foundations, drainage and
backfill: Foundation is
installed, allowing time for concrete curing and formwork removal. The foundation is
damp-proofed, drainage systems installed and backfill brought in. Additional measures for
foundation drainage, such as waterproofing, sump pumps, ditching or dry well, are
completed during this stage.
Coverage considerations:
The foundation type and the materials used are a major contributor to the cost of the
dwelling. Removing debris after a partial or total loss and replacing part or all of the
foundation is very likely expensive.
Optional
reading:
Mandatory
reading:
|
|
|
| 4 |
The Home Takes
Shape
Framing: The
walls are framed and the roof installed. Chimney installation and the construction of
stairs or the installation of pre-manufactured stairs are generally considered
 part of the framing
stage.
Coverage considerations:
Cost calculators contain fields for framing type and materials, roof type and materials,
chimneys and fireplaces, and size and construction details about decks, porches and
balconies.
Doors and
Windows: The window and door installation generally includes flashing and
installation of locks and related hardware. Jamb extensions and trim are typically part
of the finishing carpentry work.
Coverage considerations:
Doors, windows and skylights can be basic or can be expensive, customized features. Cost
evaluators require details of the doors (French/patio), windows (bay, bow, stained glass)
and skylights (dimensions).
Plumbing, heating and
electrical rough-in: Plumbing is brought from the service connections and
roughed-in to the fixtures. Bathtubs and shower enclosures are generally installed at
this time. The furnace and duct work or piping is installed, along with ductwork exhaust
fans and mechanical ventilation equipment such as heat recovery ventilators, electrical
wiring, smoke and carbon monoxide alarms, telephone and computer lines and cable TV is
roughed in throughout the dwelling.
Coverage considerations:
The year built (age) field in cost calculators provides a good indication about a
home's plumbing, heating and electrical system. In general, risk increases with
age, and with additional loading such as secondary suites, and handy-man add-ons. The
relevant cost calculator fields include kitchen and bathroom features; heating type;
fireplace and air conditioning details, and miscellaneous systems.
Optional
reading:
Mandatory
reading:
|
|
|
| 5 |
The Finishing
Touches
Exterior finishes stage: Brick, exterior siding and stucco, soffit, fascia,
eaves troughs, downspouts and window and door calking are all part of the exterior
finishes stage. Exterior trim and millwork, staining and painting may also be carried out
at this stage.
 Insulation, air and vapour barriers: Installation of
insulation, air barriers and vapour retarders including the detailing around
penetrations, fixtures and outlets are completed at this stage.
Interior
finishes: Installation of ceiling, walls and floor finishes. Immediately after
the floors are installed the walls and ceiling finishes are prepared for painting and
varnishing. The finishing carpentry for interior doors, frames, shelving, trim, stair
balusters and handrails are completed during the interior finishes stage of the home
construction.
Coverage considerations:
The relevant cost calculator fields include exterior finishes, ceiling types and
materials, interior wall and flooring finishes.
Paint, cabinets and
fixtures: Painting and varnishing are usually performed at the beginning of this
stage. Cabinets and items such as ceramic tile backsplashes are installed. While this
work is being completed, plumbers complete the installation of plumbing fixtures and
electricians finish connecting circuits, receptacles, switches, light fixtures and smoke
alarms. Connections to equipment such as furnaces, water heaters, mechanical ventilations
systems, stoves and clothes dryers are also completed at this stage. Grills and registers
for forced-air systems and radiators for steam, hot water or electric baseboard systems,
built-in dishwashers and stoves are also installed during this stage.
Coverage considerations:
Details about interior wall finishes, kitchen finishes and appliances, bathrooms and
heating could add to the value of the home.
Landscaping; final
stage: Lot grading, driveway, steps and walkways are completed. Ground cover,
shrubs and trees are installed. Carpentry work associated with decks, fences and
underground sprinkler systems are carried out during this final stage.
Coverage considerations:
Component materials for decks, balconies and handrails can add to the value of the home.
If there are tall or mature trees in close proximity to the home, suggest mitigation
measures against fire or windstorm. In the event of either a partial or total loss, after
completion, debris removal costs may increase as work would have to be done while working
around the existing landscaping.
Optional
reading:
Mandatory
reading:
|
|
|
| 6 |
New Construction vs.
Reconstruction
 The stages detailed in this article relate to new construction; however, insurance
and the cost evaluator calculations are concerned with reconstruction. The costs and
stages for new construction and reconstruction can differ greatly.
In the event of a total loss the
stages of reconstruction could vary as the site would already be established and the
foundation may be usable. In the event of a partial loss the stages in which repairs
would be completed would vary considerably when taking into account that the tradespeople
may have to come back several times over the course of a repair or rebuild because of the
tear-out.
Other contributors to the difference
between reconstruction and new construction:
1. Economy of scale -
When contractors build several homes at a time, they may receive price discounts that may
not be available when they are building just one house.
2. Roof down instead of Foundation
up - New constructions starts with the foundation. A partial loss involving
only repairs and not a total rebuild could mean working from the top down, for ex.,
removing the roof and repairing from the roof down.
3. Debris removal, demolition and
protection - Repairs or rebuilding would begin with a partial or totally
destroyed building. The site would have to be cleaned and rubbish removed. There may be
parts of the home that are not destroyed, but must be protected from further damage,
covering a roof, for example. With a new build the site would start clean.
4. Labour - When contractors have several houses under construction, they will schedule the
trades - plumbers, electricians, carpenters, etc. - for the most cost-effective use of their
time. However, when a single home is being repaired or rebuilt, the possibility of this
cost-effective scheduling would be unlikely.
5. Worksite access -
After a total or partial loss and repairs are underway, the contractor will be further
impacted by the site access. There may be established landscaping such as trees, shrubs,
flowerbeds and fences that could obstruct the site and limit access. Materials may have
to be delivered further away and hand-carried to the construction area.
6. Building code changes - Rebuilding or repairing must meet current building codes that may be different
from when the house was originally built
7. Special features -
The dwelling could contain materials or special features that are not common and
therefore difficult to replace.
8. Inflation -
Construction materials frequently increase in cost. The replacement materials (and
labour) will be purchased during different market conditions than those that went into
the original construction.
As many brokers know too well,
it is an inexact science, to say the least, to determine the degree to which
the valuations generated by the commonly used software products represent
accurate, localized reconstruction costs versus new construction costs. Debris removal
and builder's profit and overhead is often estimated as a percentage of the home's
valuation. The valuations are based on Canada's National Building Code, but may not
necessarily include provisions for the B.C. Building Code or municipal bylaws. However,
a professional insurance appraisal for a high-end home might include allowances based
on local knowledge of bylaw changes ( Vancouver's sprinkler requirement, for ex.) and
other reconstruction factors. In many cases it would be prudent for the broker to
recommend a bylaws extension to the insurance policy.
Optional
reading:
|
|
|
| 7 |
Quiz
Take the quiz to assess your
learning and to qualify for CE credits.
Please
Note!
- To earn CE credits from this
HyperArticleTM, you must achieve a score of 60% or
higher on the final quiz
- If you do not pass the quiz, you are permitted to re-take it as many times
as necessary but the system will only allow you to do so once every 24
hours
- You have 30 minutes to
complete the quiz...if you stop part-way through, it cannot be restarted for 24
hours.
Good luck!
|
|
|
| 8 |
Optional - Discuss
this Article
Join the discussion by clicking the
following link...
|
|
|
| 9 |
Optional
- Additional Resources
|
|
|
| 10 |
|
|
|
|
Skip Announcements
Coming
soon...
"House Styles"
"Residential Electrical Hazards"
and more!
|
