One of the most common questions homeowners ask is, “How much home insurance coverage do I really need?” Many assume their coverage should match their home’s market value, but that’s not always the case. The key to properly insuring your home is understanding the difference between reconstruction cost and market value—and why one matters more than the other when it comes to home insurance.
Reconstruction Cost vs. Market Value
- Reconstruction Cost – This is the cost to completely rebuild your home from the ground up with similar materials and quality, including labor, permits, and debris removal. This amount can vary depending on local construction costs, supply chain fluctuations, and unique features of your home.
- Market Value – This is how much your home would sell for on the real estate market, including the value of the land. Market value fluctuates based on factors like location, demand, and the local economy.
Your home insurance policy should be based on reconstruction cost, not market value. If you insure your home only for what it could sell for, you may end up underinsured, leaving you responsible for rebuilding costs that exceed your policy limits.
How to Determine Your Home’s Reconstruction Cost
At Greg Wilson Agency Inc., we use specialized tools and industry data to estimate your home’s true rebuilding cost. Here are a few key factors that influence reconstruction cost:
✔ Square Footage – Larger homes require more materials and labor.
✔ Building Materials – High-end materials like custom woodwork or stone cost more to replace.
✔ Age of the Home – Older homes may require specialized craftsmanship or hard-to-find materials.
✔ Local Construction Costs – Prices for labor and materials vary by location and market trends.
✔ Unique Features – Custom kitchens, high ceilings, or specialty architecture increase rebuilding costs.
Other Coverages to Consider
Beyond standard dwelling coverage, you should also evaluate:
- Personal Property Coverage – Protects your belongings (furniture, electronics, clothing).
- Loss of Use Coverage – Helps pay for temporary housing if your home becomes unlivable after a covered event.
- Liability Protection – Covers legal costs if someone is injured on your property.
- Extended Replacement Cost Coverage – Provides an extra buffer in case rebuilding costs exceed your coverage limit.
Get the Right Coverage with Greg Wilson Agency Inc.
Every home is unique, and your coverage should be too. At Greg Wilson Agency Inc., we take the time to assess your needs and ensure your home is fully protected. Contact us today for a personalized home insurance review and let’s make sure you have the right coverage for peace of mind.