Ensure that your Homeowners policy limits correspond to the cost to rebuild in case of a covered loss to your home, whether it is caused by a fire, windstorm, or other covered loss.
Replacement cost insurance covers the cost to replace or repair a home with materials of the same or comparable quality. For the purposes of coverage - and unlike market value - replacement cost policies do not include the value of any land and is determined based on the amount needed to hire contractors and purchase materials to repair a home or construct a replacement.
Purchase Adequate Coverage
You decide how much coverage to buy for your home, but we recommend purchasing coverage equal to the full estimated cost of rebuilding your home.
How Does this Differ from Market Value?
The market value of your home is the amount a buyer would pay for your home, including the land, no matter how much rebuilding would cost.
What is Replacement Cost?
Replacement cost is the rebuilding cost necessary to repair or replace the entire home, including cistern and slab. This cost is different than the following:
- The market value
- The purchase price or the cost of the land
- The amount owed on a mortgage
How do I Know Replacement Cost?
Get an estimate of the replacement cost of your home from a professional building estimator. Not all real estate appraisers will estimate the replacement cost for your home, but some have the experience and estimating tools necessary to assist with this.
When making a major change, let us know if changes need to be made to your coverage. For example, if you’re replacing a standard bathtub with a whirlpool tub, or if your new countertops are made of marble, your home improvements could add enough value to your home to justify reexamining your coverage limits.
We’re Here to Help
Have other questions or doubts? Our team is ready to assist you in the process of purchasing the right coverage to protect your home and property. Also, bear in mind that flood coverage must be purchased separately. Standard homeowners' insurance policies will not protect you in case of a flood.
3 Factors Affecting Your Homeowners Insurance Cost
Ever wonder what dictates the rate you’re being charged for the insurance on your home? Every insurance company rates differently, but here are some factors your insurer could be taking into consideration.
- Age and Type of Roof - newer and certain types of roofs hold up longer and protect your home better. That means that if you have an older roof or a roof of a certain material, your home could cost more to insure.
- Age and Structure of Home - older homes and those built with certain materials are typically harder and/or more expensive to replace and could result in a higher rate.
- Claims History - studies show the more claims you’ve filed in the past, the more likely you are to file new claims in the future. The cost of previous claims is also important. The claim history on your home is probably one of the most likely rating factors your insurer is taking into consideration.
The deductible amount, replacement cost, and liability limit on your policy also play a part in your premium rate. These factors differ from others because you have some control over them when setting up your policy.
Remember, every insurance company rates differently so your insurer may not look at all of these factors and could be considering others not mentioned. To learn more about rating factors, contact us.