GRAND LAKE, Colo. (CBS4) – When is the last time you checked your insurance policy? It’s something many homeowners don’t do often enough. In Grand County, homeowners have learned it’s necessary. Those trying to rebuild following the East Troublesome Fire have discovered that the cost to rebuild is a far cry from what insurance adjustors are putting together for the market.

(credit: CBS)

“The insurance companies require you to do an appraisal, so they have the appraised value of your house not necessarily the replacement cost. So, they come and then they take a look at your house and say okay, well your house is only going to be appraised for ‘x’ amount, so that’s how much money we’re going to give you. They don’t consider that our house was built in the 50s and for code and current lumber and all the material pricing… it’s significantly greater,” said Lindsey Morrow.

Lindsey Morrow and her husband Rich had no warning when the East Troublesome Fire ripped through their property last October.

“We got the dogs, got the kid and we had a few minutes and then suddenly it blew up,” Lindsey continued, “by the time we got to the top of the driveway I mean, everything behind us was engulfed in flames.”

Today, the Morrow family is rebuilding, and the foundation is finally in place. But to get to this point? It was a fight.

“Check your insurance policies so making sure your policy is covered, not just for what you bought the house, but for that replacement cost. What we found out is it would probably be better to go 25% above what the insurance policy wants to just because material pricing is so high, and then when you file a claim like this for complete loss there’s so many fine line items that you know, you’re just not aware about,” said Lindsey.

(credit: CBS)

Lindsey knows the market well. She’s a realtor, director of tourism and formally with the Grand County Builders Association. Still, navigating loss of this magnitude with the insurance company was more difficult than she could’ve imagined. After nine years with GCBA, she decided to leave so she could focus on rebuilding.

“Our bid, for example for lumber, in a matter of 45 days increased over 26% and you know, from October, we’ve seen lumber pricing go up 300% and it’s not just the framing of the house, it’s everything from window trim to flooring to materials, anything that’s you know that’s derived from that, we’re seeing increases,” she said.

“Plus, you’ve got COVID involved, and it shuts down all the big manufacturers that produce all of the appliances and doors and windows, so you have to think ahead to say,  ‘Okay I want this window’,” said Rich.

The Morrows had to order windows long before they were ready to rebuild.

“We ended up ordering ours back in December, hoping that we would have them by the end of the summer but not having insurance money yet to cover that, you’re trying to budget to say, ‘Okay, insurance money is going to come in eventually, but we can’t delay our project 20 weeks,” said Lindsey.

(credit: CBS)

While it was a battle with insurance adjustors for the Morrows, others who lost their home to the fire were severely underinsured or had no insurance at all.

“Insurance has been one of the biggest hurdles to overcome because there were several people that were uninsured and the vast majority of people, we’re hearing numbers of 67 to 75% of the people that lost homes were underinsured. To top that off, we’re dealing with inflated mountain construction costs and the elevated material costs right now that just don’t correlate to what insurance company adjustors are putting together for our market,” said Steve Jensen, President of the Grand County Builder’s Association.

Jensen said of the 366 homes lost to the fire, along with even more outbuildings, only 36 building permits have been submitted. He says some owners have chosen to move. Others are limited by the building costs and limited supply.

“We’re saying the average square footage cost to rebuild is at $400 per square foot average,” Jensen continued, “We’re seeing insurance adjustment estimates come back at $200 a square foot.”

Insurance may be the biggest hurdle to overcome, but Jensen said the issue with inflation goes far beyond what insurance adjustors are quoting homeowners.

“I might go so far as to say it’s more of a global issue when you talk about the supply chain impacts to various industries, not just the construction business, for commonly used material prices, our average increase is 287% as of last week. Some materials — sheet goods, over 40%. That’s a big percentage, but that’s only a portion of the construction costs you also have appliances and cabinetry and windows… all the materials are seeing price increases and maybe a bigger issue is availability, limited supply, and excessive lead times so people can get into a situation where their projects are put on hold while they’re waiting for materials to arrive,” said Jensen.

Jensen and Morrow agree — the key is to check your homeowner’s insurance policy annually.

“I think where we see a lot of the underinsured instances, where people have had a policy for 15 years and have never looked at it and so it’s not relevant the purchase price of their home is not relevant to the replacement cost,” said Jensen.

“The fact is we were in an overheated market prior to the fire and so there was already a complaint about lack of availability of qualified trades and not just builders, but all of the subsidiary trades and that’s compounded by this 366 home increase.”

Jamie Leary