Your reconstruction cost estimate (also known as your dwelling coverage limit) is part of your homeowner’s insurance policy. It refers to the cost of rebuilding your home and any attached structures as they were before a total loss. The most important thing to know about a reconstruction cost estimate is that it’s not the same as your house’s current market value.
The simplest way to determine your home’s reconstruction cost estimate is to look up the average per-foot rebuilding costs (labor and materials) where you live. Multiply that per-foot cost by the square footage of your home and any attached structures.
A home appraisal looks at the real estate market in your area and comparable properties to determine a sale price for your house based on its location, condition and other relevant factors.
In contrast, a reconstruction cost estimate is solely about the price of labor and materials. If you had to build your home from the ground up, to resemble its current condition, what would it cost?
It’s important to choose the right amount of dwelling coverage, or you could be left with out-of-pocket costs for the difference between your coverage limit and the actual reconstruction cost. When you contact me I will also explain the differences between Guaranteed replacement cost, Extended replacement cost, and Functional replacement cost. Did you know that you have options?
The replacement cost for your home refers only to the price of labor and materials. Reconstruction cost accounts for additional costs related to rebuilding such as demolition, debris removal, and more.
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