Home Insurance Value - Replacement Cost

 

While working with clients to come up with an appropriate replacement cost for their home, we see much confusion about the value we suggest. The primary purpose of insuring a home to it’s correct value is to make certain our customers have adequate coverage. this way, in the unfortunate event of a loss, our customers have sufficient coverage to rebuild their home to pre-loss condition. It also helps assist in quicker, easier claim settlement. So how does TASK Insurance Agency, Inc. calculate this replacement cost? The calculation method that we use to determine replacement of a home is based on Reconstruction costs, not Market Value or the cost of New Construction.

Reconstruction Cost

The Reconstruction cost of a home is the cost to rebuild today with similar materials and craftsmanship, used during its original construction. Building experts say that reconstruction can cost up to 30% more to rebuild a house than to build it new.* Builders hired for reconstruction require a higher skill set since they are required to work around existing structures, landscaping and power lines. They also need to be able to match up new materials to existing materials. We use reconstruction cost because it most closely approximates the cost to rebuild the home to a pre-loss condition