One of the misconceptions we encounter when reviewing home insurance policies is that your policy should match what your home could sell for. It doesn’t and it shouldn’t.
Market value is driven by location, demand, school districts, and the land your home sits on.
Insurance value is driven by one thing: what it costs to rebuild your home today with current materials, labor, and code requirements.
You don’t insure your home for what a buyer is willing to pay.
You insure it for what a contractor will charge to rebuild it after a disaster.
That’s why your “Dwelling Coverage” may be higher (or lower) than the market price. The goal isn’t to estimate your home’s resale value, which fluctuates year over year. The goal is to make sure you can rebuild the same home, with the same quality or better, after a major loss.
When a claim happens, the only number that matters is the cost to restore your home to what it was before. That’s replacement cost. That’s insurance value. And that’s why it matters.
If you ever want a review of your coverage, or you’re unsure whether your home is insured correctly, I’m here to help.