What is the difference between Market Value and Replacement Cost? How does it affect my insurance coverage?
Market value is the price that a house, including land , could normally sell for . Replacement cost is todays cost to rebuild or replace a structure with materials of like kind and quality. Insurance to 100 percent of the homes replacement cost is necessary if you are to completely rebuild your home in the event of a total loss. When the market value of a house is much lower than its replacement cost, the amount of insurance could be based upon the market value of the home. A homeowners HO OO 08 Modified Coverage Form policy may be written when this situation occurs.
