For homeowners looking into home insurance coverage, a common question asked is ‘do I need to insure my home for replacement cost’ and ‘is this coverage worth it?’. Here’s what you need to know about home replacement cost when considering your home insurance coverage.
Do You Have to Insure Your Home for Replacement Cost?
If there is a mortgage on the house, yes; most financial institutions require you to carry replacement cost coverage on your policy. If there isn’t a mortgage, there are various options you can select including actual cash value or replacement cost coverage.
Is Replacement Cost for Homes worth It?
If you’d need your home fully repaired or replaced in the event of a loss, without consideration of depreciation, replacement cost is worth it. If you’re not interested in full repair or replacement, selecting actual cash value over replacement cost may generate savings in premium.
Replacement cost coverage is designed to put you back in the same position you were in prior to the loss. If your house needed to be rebuilt from the ground up in the event of a total loss, replacement cost coverage is the coverage you’ll need to ensure your home is fully rebuilt.
Replacement Cost Ensures Your Home Will Be Replaced Back to Its Original Condition
Unlike actual cash value coverage, depreciation is not calculated for replacement cost coverage. It is for this reason that financial institutions require homeowners to carry replacement cost coverage on their policies. Although replacement cost coverage may result in slightly higher policy premiums, it also ensures your home will be repaired or replaced with a residence which is as similar as possible to the original house, before the loss, utilizing current methods, materials and workmanship.
Replacement cost is the most popular coverage choice and is the recommendation of most insurance agents and brokers; however, outside of your mortgage provider’s requirements, you do not have to have replacement cost coverage. A conversation with your insurance provider can help determine which coverage choice will best suit your needs.
Estimate Your Home Replacement Cost with The Douglas Residential Cost Guide
After determining if replacement cost coverage is right for you, the next question will be, ‘how much should my replacement cost be?’ This is a question that can be answered very simply using the Douglas Residential Cost Guide. The Douglas Residential Cost Guide has been developed by leading industry experts with over 30-years of valuation experience. The residential cost guide has been developed by Canadian’s for Canadians, using Canadian market data and trends. User-friendly and trusted across many industries, Douglas Residential Cost Guide is replacement cost made easy. Visit Douglas Residential Cost Guide today to get started.