Large Property Loss Claim: To Restore Or To Rebuild

When large property losses occur, there is an early effort to understand whether the damage can be repaired or require demolition and a new rebuild.

After initial mitigation and safety liabilities are controlled, the fire marshall office typically conducts its investigations. An engineering firm is often requested to attend the site for damage review. The engineer plays the most significant role in determining whether the structure is a restoration or rebuild project. The engineer will also provide an opinion on realistic approaches and what is most practical for each unique claim. Sometimes it’s actually cheaper to demo and rebuild new than to attempt to repair a structure with endless unknowns and virtually impossible to bring to a reasonable completion level or adequate building code levels. 

It’s possible where an engineer’s report suggests proceeding with restoration, but the policyholder prefers to demolish and rebuild new by investing personal funds. This choice can stem from an interest in changing or improving the existing design or property’s functional use. In this case, the insurer will typically cash out or financially collaborate with the policyholder to see them proceed independently with a completely new rebuild. 

The claim will often proceed with a restoration due to some of the following circumstances: 

  • little structural damage
  • seasonal temperatures are favourable above freezing levels
  • perimeter and roof are intact for containment
  • damage is limited to cleaning and gutting of materials or surfaces
  • site conditions restrict the option to demolish and rebuild
  • heritage or legal limitations don’t permit full removal and rebuild


A claim will pursue a rebuilding approach when the inverse is valid from the list above. The word “definitive” is one we like to use as a “measuring tool” for sound risk management review. For example, suppose any loopholes could remain open and left to the policyholder to debate or refuse as a satisfactory, finished product. In that case, it is best to avoid that scenario at almost all expense. In some cases, cleaning and repairing isn’t a successful outcome with significant losses. What is most definitive, in these scenarios, is a complete replacement with a new product.  

Naturally, economics is one of the main factors involved after safety and risk management has been completed. A policy limit is in place with an insurer and policyholder; in a perfect world, all parties agree to the best option in front of them. Unfortunately, it can be a challenge to satisfy all the interests involved, but a sharp, professional insurance adjuster can be the catalyst to a successful outcome! 

As an adjuster, managing the logistics surrounding the claim will include: 

  • involving the fire marshall report,
  • engaging the engineering firm for review and reporting, 
  • ensuring the policyholder is settled in some form of the temporary dwelling either for home or business purposes, and ultimately, 
  • keeping a cohesive plan of attack moving forward.  


Explaining the directional paths to the policyholder of assessing whether a claim could result in restoration or rebuild is a critical process for an adjuster to communicate clearly.  

An insurance company may “win” with a policyholder’s claim by taking the most traditional approach vs. the short term, cheapest method. In summary, “out with the old and in with the new” can be a challenging debate resulting in positive or negative outcomes.

If you’ve experienced a large property loss and are looking for a trustworthy builder, contact us. Rebuild Response is the only contracting company with specialized services to the rebuild process across Ontario. With over 50 years of combined building experience, you will understand why the insurance industry has relied on Rebuild Response for the past decade. To learn more, go to