Cost to Rebuild vs. Replacement Cost vs. Market Value

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A Breakdown of the Differences Between Market Value, Replacement Cost & Cost to Rebuild

Far too many homeowners are confused about the difference between market value, replacement cost, and the cost to rebuild. As a homeowner, it is important that you know the difference between these terms so that you can best protect your biggest investment. We understand how complex insurance terms can be to those outside of the field, which is why we have gathered some informational points to guide you:

  • Replacement Cost – This value indicates the actual cost it would be to replace your home after a perilous disaster. You will want to work closely with your insurance provider to determine an appropriate amount for this.
  • Market Value – This value determines the price of your home if it were to be on the market. Therefore, this is not the value you want your replacement cost under your homeowners insurance policy to be. Many homeowners confuse this term, assuming that this is the best standard of replacement cost. However, since these numbers fluctuate with market conditions, this is not a good reflection of replacement cost.
  • Cost to Rebuild – The cost to rebuild your home will be determined by a wide range of calculations, including the cost of construction, foundation, materials, finishes, materials, labor, overhead, profit, interior designing, consultants, engineers, and the list goes on and on.

Please do not hesitate to Contact any representative with Chivaroli Premier to assist in determining the most optimal reimbursement provision to select under for your homeowners insurance program.