Insuring Your Home to Value

Any idea how much it would cost to rebuild your home from the ground up?

Most people have very little idea of how much it would actually cost to rebuild their home. In fact, it has become such a  problem that Marshall & Swift, a leading cost data company, estimated that 2/3 of homes were under-insured in 2011. Further evidence of this rising problem can be found in the aftermath of the 2011 California wildfires, where three quarters of affected homeowners said they did not have enough insurance to fully cover their losses. These gaps in coverage can be very costly, and end up costing homeowners tens of thousands of dollars.

So why are so many people under-insured? Three main factors have led to such a high rate of underinsured homes.

  1. People don’t know the true replacement cost of their home.

Replacement cost is defined as the cost to replace the damaged property with materials of like kind and quality, without any deduction for depreciation. This is very different from the market value of a home, and the two should not be confused. When trying to calculate the replacement cost homeowners should take into account location, size of the home, materials used, and level of finishes. Most insurance companies have software that can help homeowners get fairly accurate replacement cost estimates.

2.  People are unaware of how much stuff they actually have.


It is easy to take for granted all the personal property within a household.  All homeowner policies come with a limit of personal property coverage, but many homeowners who experience losses have found this not to be enough.  Remember, the personal property must be enough for all of your family’s clothes, furniture, appliances, electronics, decorations, toys, and everything else that fills up your home. Taking time to inventory your home can ensure individuals have sufficient personal property coverage in the event of a major loss. Check out this really cool home inventory program from the Insurance Information Institute.

3.  Homeowner’s base their insurance decision on which policy has the lowest price.

Many times the policy with the lowest price also has the least amount of coverage. Look at more than just price when buying homeowners insurance. The cost of additional coverage is relatively inexpensive in the long run. For example insuring a home for $200,000 plus a 25% additional coverage endorsement ($250,000 in total coverage), instead of $180,000 may run someone around $70/year in additional premium. Seventy dollars for Seventy thousand dollars in additional coverage seems like a no brainer.

Every homeowner should have a n insurance policy that provides them with adequate coverage if a catastrophic loss were to occur. Below are a few suggestions you can use to help make sure you are insuring your home to value:

  • Have us run a replacement cost analysis on your home
  • Get a replacement cost appraisal done
  • Take a home inventory and keep track of it
  • Purchase a policy that includes additional or guaranteed Replacement Cost coverage


We tend to think that all homeowners insurance is the same, but no two homeowners policies are alike. Often, for only a few more dollars per month, you can go from a policy that could leave you exposed to HUNDREDS OF THOUSANDS of dollars of potential losses to a policy that better protects the home you have worked so hard to earn. If you are interested in seeing how much home insurance might run you, you can get a free no obligation quote right on our website at the link below.