When a major property loss leads to reconstruction or repair, the true financial impact often goes far beyond physical building materials. While most policyholders focus on “hard costs” like labor and materials, soft costs—such as architectural and engineering (A&E) fees, permits, financing expenses, and project management—can represent a significant portion of the overall loss.
At Willis, Willis & Willis Public Adjusters (Willis Public Adjusters), we help homeowners, property managers, and business owners identify and recover these often-overlooked costs through strategic documentation and policy interpretation. We proudly serve clients throughout California, Washington, Oregon, Idaho, Georgia, and Nevada.
What Are Soft Costs in Property Insurance Claims?
Soft costs are the indirect expenses associated with reconstruction or repair following a covered loss. They are necessary to restore the property, but they’re not tied directly to physical construction.
Common examples include:
- Architectural and engineering (A&E) fees for design, structural evaluation, and code compliance
- Building permits and inspection fees required by local authorities
- Consultant and project management costs for coordinating repairs and rebuilds
- Legal, accounting, and administrative expenses related to the claim or rebuild
- Financing or loan interest costs during construction delays
- Temporary utility connections or energy setup fees
These costs are real, measurable, and often mandated by local code or lender requirements—but many property owners don’t realize they may be insurable.
When Soft Costs Are Covered
Coverage for soft costs typically falls under one of two areas:
1. Commercial Property Policies with Time Element Coverage
These policies may include or endorse Soft Cost Coverage—protecting additional expenses incurred due to delay in project completion caused by a covered peril.
For example:
- Extended design fees after a fire rebuild
- Permit resubmission costs due to code changes
- Additional management or administrative time
2. Builder’s Risk or Course of Construction Policies
Builder’s Risk policies frequently include soft cost endorsements designed to cover financial losses associated with project delays and administrative costs.
Typical covered items include:
- A&E fees
- Permit and plan review costs
- Additional insurance or loan interest expenses
- Temporary facility or equipment rental costs
Our adjusters review your policy to confirm whether soft cost coverage applies and how limits are structured—many policies specify a dollar cap or percentage limit that can be adjusted pre-loss or negotiated post-loss.
Why Soft Costs Are Often Disputed
Insurers commonly challenge soft cost claims because they can be difficult to quantify or verify. Carriers may argue that such expenses are “ongoing business costs” or “betterments” rather than necessary loss-related expenses.
To overcome this, we develop clear, defensible documentation, including:
- Invoices and contracts for A&E and project management services
- Proof of additional costs caused by the loss (not part of the original scope)
- Detailed time and expense tracking during delay periods
- Professional statements from architects, engineers, or lenders confirming loss-related impact
By aligning these records with specific policy language, we substantiate coverage and secure payment for legitimate, delay-related costs.
A&E and Code Compliance Fees
After a fire, flood, or storm, many properties require architectural redesigns and engineering evaluations to meet current building codes. These expenses often include:
- Updated structural and mechanical drawings
- Energy compliance reports (Title 24 or CALGreen in California)
- Soil, wind, or seismic studies for rebuild design
- Civil engineering for drainage or utility redesign
Even when these fees weren’t part of the original scope, they can be covered under Ordinance or Law or Increased Cost of Construction provisions.
Our team works closely with engineers, architects, and contractors to ensure every code-driven expense is fully documented and recoverable.
Permits, Fees, and Government Requirements
Reconstruction often triggers new permits and governmental fees—including:
- Building, electrical, plumbing, and fire permits
- Plan check and inspection costs
- Utility connection or reactivation fees
- Temporary occupancy permits
We help clients prove these are “directly resulting from the covered loss”, making them eligible for reimbursement under your policy’s soft cost or code upgrade provisions.
Project Management and Administrative Time
Rebuilding after a major loss can take months or even years, requiring oversight from multiple professionals. These management activities—scheduling, vendor coordination, compliance tracking, and documentation—carry real costs.
Some policies explicitly cover project management or owner’s representative fees when incurred as part of restoring the property. We provide the structure and documentation to support these claims, using time logs, contract terms, and project accounting records.
Best Practices for Recovering Soft Costs
- Identify coverage early – Review your policy for “soft costs,” “extra expense,” or “delay in completion” provisions.
- Track all invoices and professional contracts – Keep clear records from day one.
- Separate pre-loss and post-loss costs – Insurers only cover expenses directly tied to the covered event.
- Document delay impacts – Note any additional time or fees due to plan revisions, code changes, or inspections.
- Engage a public adjuster early – Proper claim setup prevents coverage gaps or denials.
At Willis Public Adjusters, we analyze both your hard and soft costs to ensure the full financial impact of your loss is accurately represented and fairly compensated.
Frequently Asked Questions
What’s the difference between hard and soft costs?
Hard costs are physical materials and labor. Soft costs are the indirect or administrative expenses—like A&E, permits, and project management—necessary to complete the rebuild.
Are soft costs automatically covered?
Not always. Some policies require a specific endorsement for soft cost coverage. Our team can review your policy and determine eligibility.
Can homeowners have soft cost coverage too?
Yes. While more common in commercial or construction policies, some homeowners’ or HOA master policies may include soft cost or increased cost of construction coverage.
Get the Full Value of Your Reconstruction Claim
Don’t let overlooked expenses eat into your recovery. Soft costs—A&E, permits, and management—are real, insurable losses when properly documented and presented.
At Willis, Willis & Willis Public Adjusters, we ensure every covered dollar is identified, supported, and recovered—so you can rebuild completely and confidently. We proudly serve clients across California, Washington, Oregon, Idaho, Georgia, and Nevada.
Call today at 1-833-556-2524 to schedule your free estimate!