Understanding Replacement Cost


Home value can be measured in different ways. Many people think their home’s market value and replacement cost are the same, but they’re actually quite different.

  • The market value of your home is typically defined as what it might sell for today.
  • Replacement cost is what it would actually cost to completely reconstruct your home using today’s materials and labor.

We hope you never suffer a severe loss, but if you do, having adequate coverage for your home’s replacement cost can make all the difference. Inspections, appraisals and annual coverage reviews help you and your insurance representative select the appropriate coverage for your home’s replacement cost.

We appreciate the trust you’ve placed in us to help protect your most important investment. We want you to have peace of mind in return. If you have any questions about replacement cost or if you think any changes to your policy should be made, please contact your insurance representative.


Know why inspections are important.The Insurance Company inspects every home we insure to confirm the replacement cost. If the Inspector determines that your home’s replacement cost is more than what it is insured for, understand why it’s important to increase your coverage.

Take an active role in protecting you home. Keep an updated home inventory in list or video form. Obtain an updated replacement cost estimate from a trusted builder or appraiser. Review these items annually with your insurance representative so any necessary adjustments can be made.

Communicate with your agent. Be sure your insurance representative has accurate current information about your home. Update them when you make significant changes, renovations or improvements.