Homeowners insurance policies come in all shapes and sizes, but there are only two primary types: a cash value policy and a homeowners insurance replacement cost policy. Although a cash value policy is significantly cheaper, you get what you pay for, meaning it doesn’t provide the policyholder with as much coverage as a homeowners insurance replacement cost policy does.

The Steps to Finding Your Homeowners Insurance Replacement Cost

A homeowners insurance replacement cost policy is unlike any other insurance policy. It is the only one that will cover the complete rebuilding of your home and also replace any of your destroyed/lost personal belongings for its full worth, excluding depreciation.

So how can you determine your homeowners insurance replacement cost?

1. Understand the formula.

The formula to calculate the cost of your replacement coverage is fairly easy to remember: square footage of your home multiplied by local building costs per square foot.

2. Contact a professional.

To find the cost and value of your home, contact your home insurance agent. He/she should possess extensive knowledge of your home and be able to provide you with an accurate number.

3. Insure your home’s worth, not cost.

If your replacement cost only covers the amount you paid for your home, be sure to alter your policy immediately. You may have made improvements to the structure that would make rebuilding it cost more, or local construction costs may make rebuilding expenses higher than what you originally paid for the property

4. Look over your policy.

Review, review, review! Make sure your homeowners insurance replacement cost looks the way you want it to. Go over the policy with your home insurance agent to ensure you avoid all coverage gaps.

Affordable Home Insurance Replacement Cost Coverage

Although a homeowners insurance replacement cost policy is more expensive than a cash value policy, it is well worth the money. But just because it’s more expensive doesn’t mean it can’t be affordable. By comparing a number of different homeowners insurance quotes and discussing your options with a home insurance agent, you could be benefiting from a quality homeowners insurance replacement cost policy at an affordable price in no time.

InsuranceAgents.com Staff contribution: Rafael Onak

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