When purchasing homeowner’s insurance, one of the main considerations is determining how much coverage is needed for the structure.  Insuring your home at replacement cost is recommended and should not be insured based on the market value.

Market value is the value of the home including the land which is not covered by the policy.  It also factors in the proximity of good schools, surrounding homes and local crime statistics.

Replacement cost is the cost required to repair or rebuild your home in the event of a loss. It will pay for the rebuilding of your home as it was prior to the loss.

Dwellings should be insured at replacement cost.  To determine the replacement cost, a replacement cost estimator should be done which calculates the value of the home based on its features such as flooring, roof type, pool and upgraded items such as built-ins, lighting etc.  It also includes the cost of labor and materials.

The policy will not pay more than the coverage limits so it’s important to be insured at the proper amount.  Contact your agent to perform a replacement cost estimator to ensure you are covered accurately.

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