Don’t be surprised by the cost to rebuild your home

An inspection can help identify special features in your home.

Many people don’t know where to start to estimate home value when purchasing homeowner insurance. For some, the first instinct may be to insure the home based on mortgage value. Others may look at real estate market value, property tax basis or some other factor. But any of these values could be far less than the actual cost to rebuild, and that is the key consideration when buying insurance to protect against a loss.

There is no way to guarantee the cost to reconstruct your home in the event of a loss at some future date, but there are a couple of tools that can point you in the right direction.

Estimator  ̶  Many insurance agents run your home through estimating software designed to consider specific details of your home, along with construction costs in your community. For best results, list as many individual details of your home as possible. Estimators often have built-in defaults – such as the architectural style or quality of construction – that can have a huge impact on the home’s value. Make sure these items are correctly entered:

  • square footage
  • architectural style
  • year of construction
  • type of construction (frame vs. brick)

Remember to include any special features, such as custom cabinetry or a theater room. We discussed some of these items in our Aug. 15 blog, 7 factors to help nail down your home’s reconstruction cost.

Inspection  ̶  If you have a custom home with features that may not be adequately addressed by the estimator software, your insurance company may offer to send a professional inspector to your house to determine the reconstruction cost. The inspector usually measures the square footage, takes inside and outside photos and records the details of each room.

Once you determine your home’s correct insurance value, many insurers can automatically increase the coverage amount each year based on local inflation factors. Your homeowner policy may have other coverage options to help make sure you have enough insurance to rebuild after a loss. One option covers your home for an additional amount, usually a percentage, over the amount listed on your policy. Another option covers you for the full amount of rebuilding your home, regardless of the amount you purchased. These options may not be available from all insurers, so check with your local independent agent to discuss the best ways to ensure adequate coverage to rebuild your home.

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11 Responses to “Don’t be surprised by the cost to rebuild your home”

  1. Remodeling? Keep rebuilding cost in mind

    […] of them in our blog “7 factors to help nail down your home’s reconstruction cost”. Our blog “Don’t be surprised by the cost to rebuild your home” explores tools available to calculate replacement cost. And our blog “Insurance TLC for your […]

  2. Richard

    When you bought your home in all likelihood it was one of about 5 to 10 models that the builder was making. Sure exterior, cabinets, flooring may be different. If your home burns down, the plans and material list belong to the original builder and they may be gone, bankrupt, or not interested in building one unit. In a sense you are now having to have a home “custom” built

  3. Diane Joss

    I don’t know the insurance terminology, but there is a homeowners coverage that is more expensive but will rebuild your home regardless of costs involved – anyone know what that’s called?

    • Cincinnati Insurance

      Diane, you may be describing what we call Enhanced Replacement Cost. Many insurance companies offer similar products under various names. To best answer your questions, please see your independent agent. Thanks!

  4. ron beavers

    above would be actual replacement costs

  5. Doug Mitchell

    Regardless of any loss, even full loss, replacement for exactly what was original is easy, in that in the last 25 years or so, most/all building departments have your original plans filed with the building permit application. Some may be harder to get than others, but they should be available at least on film so a draftsman can duplicate them for a small fee. Also anyone can figure at least 15% or greater to replace what was lost, if older than 10 years. Some construction methods have changed under the codes/law and therefore will cost more, IE roofing has one of the greatest pricing increases, and in some cases up to 200% over what it took originally for basically the same thing now. Also 10-15 years ago it was not required for residential plans to be “Sealed” by an Architect, Structural Engineer, or Professional Engineer, whereas now in 99.99% of the cases it is now required, and this too has a pricing value, maybe as much as 4% of the overall cost? One good example that jumps to the forefront, that being safe rooms or internal shelters in tornado prone areas. You may have never had one before, but if you build now in those exposure areas, better check with the building officials plus your insurance carrier, as this then becomes an ADDED cost to any new construction plus not previously covered, therefore this may be an out of pocket expense when rebuilding as it was not an insured/covered item in the policy .

    • Frank

      Regards the Building dept, Re: Plans.
      Don’t count on these, as many departments do not have space to store them, and send them to a contractor for “microfilm preservation”, or other such “storage”, and if the time and need arises to access those plans they are found to be poorly copied, and or missing pages.

      Keep a notebook with the following…

      1.) Make your own copy of the original blueprints, or sketch with dimensions, noting finishes, upgrades etc. store as noted below. This should include for example 6 panel oak, pine, or masonite
      doors. (about $300 difference times roughly 26 doors)

      2.) The best way for you to receive the best service and return on your insurance investment is a full inventory, accompanied by photographic documentation…


  6. Pauline

    While shopping for homeowners insurance, i was told you are required to rebuild your home exactly as it was before, when you opt for replacement costs. I was also told that in North Carolina if you have a total loss and decide not to rebuild you would only be paid what the ruined house is worth and nothing more.
    I understand no one wants to live next to a wrecked house, I don’t see why plan modifications can’t be made as long as it’s in the same price range: perhaps calculated by the price per square foot. For example I live in a 70’s split level but might prefer something different and more current if I had to rebuild.

  7. Irma Craig

    My daughters house burnt last year. The house would have sold for approx. $170,000. It took $242,000 to rebuild the 60% that burnt.

  8. 7 questions to ask your agent about homeowner insurance | JJacobs and Associates

    […] to be significantly more than the current market value or your loan amount. See our prior blogs: Don’t be surprised by the cost to rebuild your home; 7 factors to help nail down your home’s reconstruction cost; and Insurance TLC for your historic […]

  9. 7 questions to ask your agent about homeowner insurance | Burke Powers & Harty Insurance | Bristol TN Auto Home Commercial

    […] to be significantly more than the current market value or your loan amount. See our prior blogs: Don't be surprised by the cost to rebuild your home; 7 factors to help nail down your home's reconstruction cost; and Insurance TLC for your historic […]


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