Homeowners Insurance Replacement Cost

What is replacement cost?
Replacement cost represents the amount needed to fix or repair your house. Your insurance carrier will reimburse you for the cost of rebuilding your home when you insure your home for its replacement value. This is based on the size and structure of the house that was destroyed or damaged.

It is important to insure your home for at least 100% of its estimated replacement cost. Your building coverage limit is based upon estimates only. The replacement cost is established by using information provided by you, industry standard software, county records and/or other property sites. The actual cost to rebuild your structure or replace your personal property may exceed the policy limits, especially in circumstances where a catastrophic event has disrupted the normal supply of materials, labor, and resources.

When should I update my homes replacement cost?
• Recently made upgrades to bathrooms or kitchens
• Have added rooms or living space
• Added custom windows, molding, or other unique features
• Feel that improvements, rising construction costs or economic factors make your coverage limit outdated.

Replacement cost is NOT:
• The market value of the home
• Your purchase price or the cost of the land
• What you owe on your mortgage loan

We appreciate your time to consider the importance of estimating your home’s replacement cost. Our agency makes no assurances or guarantees that the policy limits provided will be adequate to rebuild the structure or replace your personal property. If there are any questions about the adequacy of the policy limits, contact us to review your current home features.

On another note, it is most common to insure your personal property (contents) for Replacement Cost coverage. This means like kind and quality without a deduction for depreciation. In contrast, Actual Cash Value coverage is also available for a reduced premium. However, in this claim scenario, you would only be reimbursed for the replacement item after depreciation for age, condition and other factors were taken into consideration. We will gladly discuss with you coverage features and options.

Our staff of personal insurance advisors specialize in obtaining competitive rates and versatile coverage options which can be tailored to fit your needs. It is also recommended that you review your policy limits and deductibles each year as your home insurance renews.

Do you have questions about the coverage on your current homeowners policy? Contact us, we are here to help.