When it comes to purchasing homeowners’ insurance, we find that people often have questions when it comes to placing a valuation on their home. Most of the confusion seems to stem from an unclear understanding of the difference between the Market Value of your home and the Replacement Cost of your home.
It is important to keep in mind that Market Value and Replacement Cost are different concepts. We hope this blog gives you a better understanding of the difference between the two and how they are applied when something happens to your home and it needs to be repaired, replaced, or rebuilt.
Market Value in real estate terms is the determined price that a property will sell for in an open market. Market Value is influenced by a number of factors including:
When purchasing homeowners’ insurance, if the valuation is based on the Market Value of your home, you may find that you do not have enough coverage to rebuild should your home suffer a total loss.
Replacement cost is an estimate of the actual cost to rebuild your home as it is, with the same level of details and finishes. Replacement value is determined by a number of factors including:
We recommend insurance solutions that are tailored specifically for you and your home so that should the unimaginable occur, you will not be left vulnerable. We will obsess until we find the kind of coverage that is best for you. If you have any further questions about the differences between Market Value and Replacement Costs, please get in touch with us at 914-723-7100. We are here to help so be sure to put our expertise to work!