Insure Your Home for at least 100% of Estimated Replacement Cost
First we obtain an estimate of the replacement cost of your home, then select the coverage amount that best fits your needs. We recommend you purchase home insurance coverage at least equal to your home’s estimated replacement cost. Determining your home’s estimated replacement cost is important because it ultimately determines which policy options are available to you. Since it’s impossible to predict today what the exact cost will be to replace your home in the future, it’s important to have enough home insurance coverage to account for unforeseen circumstances.
Know the Difference between Market Value and Replacement Cost
Market value is the amount a buyer would pay for a home, including the land, regardless of how much it would cost to rebuild the home. Replacement cost is the rebuilding cost necessary to repair or replace the entire home. Replacement cost IS NOT:
- The market value of the home
- The home’s purchase price or the cost of the land
- The outstanding amount of any mortgage loan
Obtain a Replacement Cost Estimate
Before you purchase a new home, make sure you determine the appropriate amount of home insurance coverage needed. Building contractors or professional replacement cost appraisers are a good source for obtaining an estimated replacement cost. Estimates from these sources should reflect your home’s features, including any architectural details or unique building materials:
- Upgraded bathrooms or kitchen (including cabinets)
- Finished or partially finished basement
- Additional rooms or living space
- Custom molding or arched windows
- Other unique features
If you’re unable to obtain a detailed estimate from a contractor or professional appraiser, your Nulty Insurance agent we can discuss other options for estimating the replacement cost of your home.
Review Your Home Insurance Coverage Annually
Have you recently remodeled or improved your home?
When you upgrade or improve your home, you may increase its estimated replacement cost. Your Nulty agent will help you adjust your policy to meet your home insurance coverage needs. As part of your policy’s provisions, you have 90 days to notify us of any remodeling or additions to your home that increase its value by $5,000 or more.
What influences building costs in your area?
Market conditions may affect what it would cost to rebuild your home if you experience a loss. Replacement cost estimates are influenced by supply of labor, demand for labor, and the cost of construction materials. Keeping up with current market conditions in your area and changing your home insurance coverage amount accordingly will help you maintain comprehensive coverage at least equal to 100 percent of your home’s estimated replacement cost.