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How do insurance companies determine home replacement value?
My wife and I are looking to purchase a home, so we’ve been looking at home insurance. I feel like I understand how most of it works, but I’d like to know more about replacement values. How do insurance companies determine home replacement value?
Chloe Jenkins · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Home insurance
can be a little tricky to get the hang of at first, but if home replacement values are the only thing causing a little confusion, you’re in great shape!Generally, a home’s replacement value is an estimate of the amount of money it would cost to repair or rebuild your home. Home insurance companies determine this value by using data on any given home to find the value of the home, its materials, fixtures, and local services that would be needed to replace your home. Some companies will also have an appraiser come and assess the property in person.
One thing that may affect the overall value of your home replacement is the fact that most insurers will not consider the land value or the cost of demolition.
If you’re unsure of how much coverage you should get, a safe place to start would be to purchase insurance that will cover at least 80% of your home replacement cost.
When you finally settle on the right house for you, be sure to check out the
Jerry
app to find out how you can bundle your home and auto insurance
and save hundreds!The savings keep coming even after Jerry finds you great insurance at the lowest price. Before every policy renewal period, you’ll be presented with new competitive quotes, which means you’ll always have the best coverage at the best price. If you want to switch policies, that’s fine! Jerry can help cancel your old policy.
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- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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