What is "Replacement Cost"?
One of the most important distinctions you'll need to know as a homeowner is the difference between replacement cost and market value. Why? Because if you insure your home based on its market value – i.e., its selling price – you may be insuring it for just a fraction of what it would cost to rebuild. A replacement cost takes into account many of the same factors as the market value – age, size, condition and location – but adds in other factors such as debris removal, contractors' fees and architects' fees. Insuring your home to its replacement cost is the only way to guarantee the kind of full protection and peace of mind that an investment of this size requires.
For more information on insuring your home at its replacement cost, contact your professional independent agent.