How to Determine the Replacement Value of a Home

Determine the replacement value of your house.

When you buy homeowner's insurance, you may be asked to determine the replacement value of your home. This means that you need to figure out how much it would cost to build the exact same home you have now, if something happened to destroy your home and you needed to rebuild from scratch. Determining the replacement value can be difficult, but it is possible.

Instructions

1. Get an appraisal. You will need to know how much your home is worth to determine the replacement value. Many insurance companies require an appraisal when you purchase homeowner's insurance. You'll usually have to foot the bill for this, which may be a few hundred dollars, but you'll need to know the specific amount that your home is worth. Using property values from recently sold homes may help, but is not necessarily accurate since your home may have unique features that those homes don't have. It may also cost you more to replace your specific home than it would cost you to just buy another similar home, especially if your home has a lot of expensive or unique features or if property values have changed since you bought your house.

2. Consult with a contractor to find out the cost per square foot to build new homes in your area. Again, remember you are trying to find out the replacement cost for your particular home, so this will be a more accurate way of determining the actual cost to replace a house than looking at recently sold homes, since building a new house to replace your existing house often costs more than buying a pre-existing house.

3. Provide details on special features to insurers. Your insurance agent or insurance company can help you to determine if there are any special features that will raise your replacement costs. When you apply for insurance, this means that in addition to giving details about square footage, you'll also need to give details about special materials, such as granite countertops, marble floors or antique fixtures, that are installed in the house. Your insurance company can then input all this information into a database that helps determine the replacement value of your house.

References

• Georgia Insurance Information Service: Knowing Your Homeowners Insurance Policy Is VERY Important
• Kiplinger: Get Your Home's Replacement Value