Here’s a brief explanation of replacement cost:
- Replacement cost is the total cost to rebuild your house from scratch reflecting today’s prices, construction methods and building codes.
- This figure can be higher than your home’s actual value.
- The replacement cost of your home can increase following a catastrophic event results in greater demand for labor and materials.
Question I’m trying to decide whether to get “replacement cost” coverage on the house I’m about to buy. What exactly is replacement cost and how is it different from appraised value?
Farmers Insurance® agent John Drakulich of Sparks, Nevada offers the following description of replacement cost.
Answer Replacement cost is the total cost to rebuild your home just as it stands today. It takes into account current construction techniques, prices for labor and materials, and the location of your home.
Replacement cost is not the same as your home’s market value. The cost to rebuild your home from scratch may be higher than what you could sell it for today. When determining replacement cost, your goal is to try and make sure you have sufficient coverage for all potential expenses associated with rebuilding.
Farmers Home
Insurance
Find out why home
insurance from
Farmers is a smart
choice.
The information contained in this page is provided for general informational purposes only. The information is provided by Farmers® and while we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to this article or the information, products, services or related graphics, if any, contained in this article for any purpose. The information is not meant as professional or expert advice, and any reliance you place on such information is therefore strictly at your own risk.
Related articles
“A Smoke Alarm Saved My Life”
Before You Redo Your Closet, Read This
© 2024 Farmers