Question 1

What is the difference between replacement cost and market value?

Accepted Answer

Replacement cost is what it would cost to rebuild your home at current construction prices. Market value includes land value and real estate market factors. For insurance purposes, you need the replacement cost, not market value.

Question 2

How are construction costs per square foot calculated?

Accepted Answer

Construction costs vary by quality tier (economy, standard, premium, luxury), region, and home type. Premium homes cost 30-50% more than standard, and luxury can cost double. Regional multipliers account for local labor and material costs.

Question 3

What should I cover in contents insurance?

Accepted Answer

Typically 50-70% of dwelling coverage for contents. Consider special items like jewelry, art, or expensive electronics that may need additional scheduled coverage or riders.

Question 4

How much liability coverage do I need?

Accepted Answer

Most experts recommend $300,000-$500,000 minimum liability coverage. Consider an umbrella policy for additional protection if you have significant assets to protect.

Question 5

What deductible should I choose?

Accepted Answer

Higher deductibles (1-2% of dwelling value) lower your premium but increase out-of-pocket costs in a claim. Choose based on your emergency fund size and risk tolerance.

Home Insurance Replacement Cost Estimator