Purchasing a home is a big step towards your future and can be quite an investment. When purchasing homeowners insurance, you’ll want to make sure that you’re getting enough coverage to protect that investment as well as the financial future of your family. One question insurance companies get asked the most when it comes to homeowners insurance is what is replacement cost v.s market value, and which one they should look at when it comes to insuring their home.
Replacement cost is the overall cost of what it would be to repair or rebuild your entire home. Say something happened to your home and you had to replace part or all of it, your insurer would reimburse you for the amount of money it would take to rebuild or repair whatever is needed based on the size and structure of your home. Insuring your home based on replacement cost is more beneficial in the long run because it gives you the correct amount of coverage needed to repair or rebuild your home and get you and your family settled back in no time.
Market value is the price of your home and land as it currently stands. So for example, your market value would be the price that your home would be sold in the market currently. It is calculated by the materials used to build the home and its condition, the surrounding schools, and the land on which your home is located. This means that if something happens to your home, such as a fire or other natural disaster, your insurance settlement could be less than the cost to replace the house.
At Shields Insurance, we do not use Market Value due to not wanting to run you, the homeowner, at risk of losing out on money. We want to make sure that you are covered completely and are able to protect your investment for both you and your family!
To learn more about Homeowners insurance, feel free to contact Shields Insurance Agency today at (205) 783-5893Posted on