How Is the Replacement Cost of My Home Determined?

How Is the Replacement Cost of My Home Determined?

How Is the Replacement Cost of My Home Determined?

Here’s some background on determining replacement cost:

  • Estimating replacement cost depends on multiple cost factors.
  • These include prices for materials and labor.
  • The location and features of your home matter as well.
  • The goal of this analysis is to help you decide how much coverage you want.   


Q: I have a good idea of much my home is worth, but I have no clue what it will cost to totally rebuild it.  How do I find this out?


John Drakulich, a Farmers Insurance® agent in Sparks, Nevada, discusses how replacement cost is typically determined.

A:  It's important to understand that replacement cost is not the same as the market value of your home — to determine the cost to rebuild your house, you could work with a local contractor, hire an appraiser or fill out an online cost calculator. The good news is your local Farmers agent can sit down with you and help you calculate a replacement cost estimate free of charge using an industry standard replacement cost estimator.

Some of the things you are asked about will be what you’d expect, like the number of kitchens and bathrooms. Others aren’t as obvious, but just as important — like what types of materials are the interior walls and roof made of. Some homes have copper ceilings and exotic wood floors. Another important consideration is the quality grade of your home. Is it premium, custom, above average, standard or economy? 

The replacement cost estimator uses all of this information and more to try and come up with as accurate an estimate as possible. However, the replacement cost amount is still only an estimate. With our extended replacement cost option, you can get extra homeowners coverage just in case the actual replacement cost 

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