How to Determine Replacement Cost for Your Home Insurance


You may be required to inform your prospective home insurance provider of the replacement cost for your home when you are requesting a quote for homeowners insurance. Replacement cost is the amount needed to rebuild the home to its pre-loss condition.

Conduct an analysis of your home to provide a proper description for valuation purposes. You should be able to cite such factors as square footage, composite materials and improvements. It will also help to document the replacement cost of personal property items within your home.

Determine an estimated replacement cost value by applying the following formula. Take the square footage of your home multiplied by local building costs per square foot. You should be able to contact your local builders' association or local builder and ask for an estimate of the local building cost per square foot for a residence similar to the one you own.

Utilize the services of a building cost calculator. A basic Internet search should allow you to find and utilize a free building cost calculator such as one offered by, which is available through the resource section on this page.

Ask your appraiser to include a replacement cost estimate as a component of his appraisal. This is the best way to receive a replacement cost valuation from a professional who understands the local real estate market.

Tips & Warnings

  • It may be financially beneficial to purchase an actual value insurance policy from your insurance provider if you cannot afford a replacement cost homeowners insurance policy. An actual value policy should insure up to a set amount of coverage and in doing so may meet the requirements of your mortgage holder but cost less than a replacement cost policy.

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