Understanding the Value of Your Home

There are two ways of determining the amount of insurance to place on your dwelling. Market Value (also known as Cash Value) and Replacement Cost.

Market value is the amount a buyer would pay for a home, including the land. This amount is usually less than the replacement cost because it is more expensive to build a house than it is to buy one.

Luxury Home In Expensive Subdivision
Luxury Home In Expensive Subdivision

Replacement Cost is the rebuilding cost necessary to repair or replace the entire home as it was before being damaged. Replacement cost estimates are influenced by supply of l labor, demand for labor, and the cost of construction materials. 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.

Keeping up with the current market conditions in your area and changing your coverage amount accordingly, will help you maintain coverage at least equal to 100 percent of the estimated replacement cost coverage for your home. Your Keystar Insurance Agent is a good source for obtaining an estimated replacement cost of your home. Estimates will reflect your home’s features such as: upgraded bathrooms or kitchens, finished basement, arched windows, and other unique features.