Replacement Cost verses Market Value

Homes must be insured to value. Insurance Brokerages do this by asking square footage, # of Storey’s, Brick, Vinyl or Log, is the basement finished, pool, garages, decks or porches etc. and that information is inputted into the insurance company’s computer software to determine the value of the house.

Insurance companies must insure to value so that insured’s’ are properly covered in the event of a total loss. The replacement cost includes debris removal

Market Value is not an accurate assessment for insurers.

Example is a home with a square footage of 1500 in Toronto might pay $800,000 yet for the same home in Peterborough the client might pay $270,000 but the cost to replace the home is the same, average is approximately $200.00 a square foot.
Homes must be insured to value. Brokerages do this by asking square footage, # of Storey’s, Brick, Vinyl or Log, is the basement finished, pool, garages, decks or porches etc. and that information is inputted into the insurance company’s computer software to determine the value of the house.

As you can see, you must be careful when it comes to adjusting the replacement cost of your home downward. Unless you want 50% of your home rebuilt, it is wise to perform a replacement cost estimate to determine your replacement value. Keep in mind that the market value of your home could improve and often time surpass the replacement value. In this case the value of the land has improved but will not necessarily cause the replacement cost to increase.

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Constantine Isslamow | Broker of Record

CENTURY 21 United Realty Inc. Brokerage
387 George Street South, P.O. Box 178
Peterborough Ontario. K9J 6Y8
Direct Line: 705.743.4444 | Fax: 705-743.3702
Constantine.Isslamow@gmail.com
www.ConstantineIsslamow.com