Home Insurance Details - Calculating Your Home Replacement Cost

The first step in figuring how much home insurance you need is to calculate your home replacement cost. Knowing the market value of your home won't help, because it has nothing to do with how much it would cost to build your home again if catches fire, or suffers loss due to natural disasters.

Figure out Costs of Building Materials and Labor

The cost of building material and labor adjusts from year to year, depending on the state of the economy. It’s important to rely on up-to-date figures and not what building costs were in the past. Don’t forget to include unique building materials used in different parts of your home. The price can also change if you remodel all or part of your home, or add new features and additions.

Get a Replacement Cost Appraisal

You can ask for one if you're getting an appraisal for the one you want to purchase. There are also local builders and appraisers that are able to tell you exactly how much it would cost to replace your home. If you've done any remodeling since your last appraisal, it might be time to get a new one.

After you calculate your home replacement cost, you'll know how much coverage to buy. The coverage amount should equal the amount of the replacement cost.

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