Home replacement cost is what it would cost to rebuild your home from scratch at today's construction prices -- not its market value, not what you paid for it, and not what it is assessed at for property taxes. Insuring to market value instead of replacement cost is one of the most common and costly homeowners insurance mistakes. This calculator helps you estimate the correct figure.
Enter your home's finished square footage, primary construction type (wood frame, masonry, or mixed), number of stories, year built, state and county, and any premium features: finished basement, high-end kitchen or bathrooms, custom millwork, or specialty roofing materials. The calculator applies current regional construction cost benchmarks to produce a replacement cost estimate. Compare this to your current dwelling coverage limit (Coverage A on your declarations page).
Market value includes land value -- which cannot be destroyed and does not need rebuilding. It reflects neighborhood comparables, school districts, and broader market conditions that have no relationship to construction costs. A modest home in a desirable area might have a market value far exceeding its replacement cost. A custom home with specialty materials might have a replacement cost exceeding its market value. Neither relationship is reliable for setting dwelling coverage limits.
The gap between construction costs and market values has widened significantly since 2020 due to supply chain disruptions, labor shortages, and material price inflation. Homeowners who set coverage limits based on market value several years ago and have not updated them may be substantially underinsured even if market values have risen.
If your dwelling limit is less than the actual rebuild cost, you pay the difference out of pocket. On a $400,000 rebuild with a $300,000 dwelling limit, you pay $100,000 regardless of the home's pre-loss market value. Extended replacement cost endorsements -- adding 25 to 50 percent above the dwelling limit -- are the most reliable buffer against this scenario.
Most carriers apply a small annual inflation guard but this may not keep pace with actual cost inflation. A formal replacement cost review every three to five years, or after any significant renovation, is the most reliable approach. Your agent can request a replacement cost estimator report as a starting point.