Have you ever really thought about the replacement cost of your home? Regardless of if you have or haven’t, replacement cost has an influence on your insurance rate. Use this home replacement cost valuation guide to understand it and learn how it relates to things such as market value and assessed value.
Understanding Cost Valuation
To truly understand home replacement cost, it’s important to know what it is. Home replacement cost is the cost that would exist in the case the home needed to be entirely rebuilt due to damage. This damage would be from a peril such as a flood.
There are a few factors that go into a home replacement cost estimate.
Soft costs: architects, designers, skilled labor, craftsmen, demolition, debris removal, contractor, labor.
Hard costs: hardware, window and doors, appliance, concreate, paint, drywall, bricks, roofing.
While these are a high level overview of the factors that go into the cost, there are others as well, including the quality of the materials or costs to do with removing and destroying the home.
You might think you should compare your replacement cost to your market value, but these costs are actually very different. The replacement cost of your home will be different than its market value, and will depend on the location, size and quality of the home.
How can you ensure you maintain adequate coverage?
You will have a few coverage options available to you when it comes to the right home insurance in Salt Lake City for you. Some of the most important include:
- Extended replacement cost coverage: Additional coverage to the replacement cost of your home. Extension percentages are usually 125, 150 or 200 percent.
- Guaranteed replacement cost coverage: This option means there’s no limit on the amount paid out in order to rebuild your home.
- Inflation guard: This coverage means the replacement cost of your home will increase by a specific percentage at renewal.
Do you have the proper coverage in place? Give Salt Lake City Insurance a call today to find out and get answers to your questions on home replacement cost!