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Marshall Fire victims worry they won't be able to afford to rebuild their homes

As they get quotes from builders, some residents find they're hundreds of thousands of dollars underinsured.

LOUISVILLE, Colo. — People who lost homes in the Marshall Fire are starting to figure out how much it could cost to rebuild. 

Some residents are hundreds of thousands of dollars underinsured because of high building costs and their insurance policies.

"We had a plan, and this is not what we planned," Jill Ruggles said. 

Jill and her husband, Rick Ruggles, lived in the Cornerstone neighborhood in Louisville for almost 30 years. The Marshall Fire took everything, and nothing since then has been easy. 

"With all of the variables out there, it is kind of terrifying," Rick Ruggles said. "Mostly you don't know if you are going to move back into your own home."

The price to rebuild is more than what their insurance policy will cover. 

Right now, they think the gap in coverage will be at least $200,000. They have applied to take out a $244,000 Small Business Administration loan to help cover the costs that insurance won't cover. 

Taking on this debt is not what the couple had prepared for heading into retirement. 

"A builder that we trust is giving us plus or minus $300,000 on fixing the house. If it is on the plus side, we can't afford to be here," Rick Ruggles said. 

One of their neighbors has also applied for an SBA loan, and he intends to pursue legal action against his insurance company. 

Michael Lappin bought a home in the Cornerstone neighborhood in 2006. He said he's interviewed more than a dozen builders, and the one he decided to go with gave him a quote of $325 per square foot. According to Lappin, his insurance policy will cover less than $200 per square foot. 

"What that represents is a gap of approximately $600,000," Lappin said. 

He said he's already talked to several people who are trying to buy some of the lots in Superior and Louisville.

The Home Builders Association of Metro Denver is hearing from builders that rebuilding may cost between $300 and $350 per square foot for homes between 2,000 and 2,400 square feet. That's just the cost for materials and labor, if that work was to begin today. 

Rebuilding can't start until the debris is removed, foundations are checked by engineers and HOAs make decisions on oversight issues. Once that happens, then builders will look at changes in inflation and the costs of fees. 

Ted Leighty, the CEO of the Home Builders Association of Metro Denver, said that second look may increase the final square-foot cost when rebuilding actually starts.

"The Home Builders Association of Metro Denver launched its Marshall Fire Rebuilding Task Force to provide reputable information to the public about rebuilding, identify ways that the HBA and its members can help expedite rebuilding, and offer strategies to address logistics, costs and other factors that will impact rebuilding," Leighty said. "Estimates on the cost to rebuild are precisely one of the topics being discussed by the task force members."

What to look for in your insurance policy

Morgan Lloyd is an insurance agent who has reviewed a number of policies from people who lost a home in Boulder County. He said the main issue he's seeing is that people were underinsured. 

"I think the big issue there is that people didn't have sufficient extensions," he said. "People with insufficient extensions may not have enough money to rebuild given the current elevated costs of construction."

He said an extension on a homeowner's policy provides additional coverage in the event of a total loss. Lloyd recommends adding a 50% to 100% extension, or a guaranteed dwelling replacement, to a policy. 

"Make sure you have the highest level of extensions you can possibly get," he said. 

He also recommends getting a reconstruction estimate every year. 

"It provides an accurate accounting of what is in the home and what it is going to take to rebuild the home," Lloyd said.

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