Rebuilding after a wildfire is a journey filled with challenges, and one of the most critical steps is understanding the true costs involved. Many homeowners are surprised to learn that insurance settlements often focus on hard costs (construction) while overlooking essential soft costs (design, permitting, and planning).

To help you navigate this complex process, We have created Part 03 of our flashcards that explain:

• The difference between hard costs (labor, materials) and soft costs (architectural and engineering fees).
• Why understanding both is crucial to getting the most out of your insurance claim.
• How to advocate for the full value of your rebuilding costs.

These flashcards are here to empower you with the knowledge to rebuild smarter, safer, and more resiliently.

The True Cost of Rebuilding

• Rebuilding after a fire involves more than construction costs
• Insurance companies often focus on hard costs, but soft costs • design, engineering, and permitting • are equally critical
• Knowing the full scope of costs ensures you receive a fair settlement

Hard Costs

Hard costs are the tangible, physical expenses of construction, including:

• Labor and materials (e.g., lumber, concrete, roofing)
• Site work and foundation preparation
• Installation of plumbing, electrical, and HVAC systems
• Interior finishes like flooring, cabinetry, and paint
• Tip: Provide your insurance adjuster with updated market costs for materials and labor in your area

Soft Costs

Soft costs are necessary to plan and legally execute your rebuild, including:

• Architectural and design fees
• Structural and engineering reports and design services
• Permitting and zoning fees
• Project management costs
• Temporary housing or relocation expenses during the rebuild
• Tip: Many policies cover soft costs, but you must explicitly request them during negotiations

Common Oversights In Insurance Settlements

• Settlements often only reflect hard costs, leaving homeowners to pay out of pocket for (soft costs) design and permitting
• Soft costs can account for 20-30% of total rebuilding expenses
• Failing to consider local cost increases post-disaster can result in insufficient coverage

Advice: Provide a detailed budget to your adjuster that includes both hard and soft costs

Advocate for Your Full Rebuild Costs

Hire an Insurance Advocate or Public Adjuster

• They can help you navigate policy language and negotiate a fair settlement

Engage an Architect Early

• Architects can provide a detailed scope of work and estimates of soft costs

Get Multiple Contractor Estimates

• Use these estimates to validate your claim for hard costs

Request a Detailed Replacement Cost Estimate

• Ensure this includes design, permitting, and engineering fees, not just construction

Approaching Negotiations with Your Insurance Company

Document Everything

• Provide detailed records of damages, estimates, and receipts

Highlight Code Upgrades

• If current building codes require upgrades, these must be accounted for in the settlement

Be Persistent

• It’s common for insurance companies to push back on initial requests. Advocate for what you’re entitled to

Remember: It’s your right to be made whole—not just to replace your home, but to cover the entire rebuilding process.

Understanding Policy Limits and Endorsements

Review your policy for Ordinance or Law Coverage

• This often covers code-required upgrades

Check for additional living expenses (ALE)

• You may have coverage to support temporary housing during the rebuild

If your policy doesn’t cover soft costs, ask about endorsements or supplementary options