Home Insurance Market Value versus Replacement Cost

When purchasing home insurance, one of the most important decisions you have to make is whether to accept a policy offering market value or replacement cost. No one wants to have to file a claim with his insurance provider. However, there are instances in which you may need to do so. This particular decision revolves around how the claim value will be determined. It can make a big difference in the amount the insurance provider presents to you for your claim. 


What Is Market Value?
Market value is a term describing the value of something now. In short, if you were to sell your home today, how much would you get for it? It takes into consideration many factors including increasing or falling property values.

Benefits to market value include the following:

• It is a practical option for many.
• This is a more affordable option.
• It pays what your home is worth right now, not taking into consideration purchasing very specific types of wood or managing the details of the cost to rebuild the property.

If you have a historic home or you have very specific, valuable components to it, this option may not be right for you. If your home is valued about the same as any other on your block, this makes sense.

What Is Replacement Value?
On the other hand, you may want to select replacement value. If you were to lose your home (or the specific covered item in your policy), this policy would pay whatever the cost is to have it repaired and to rebuild your home after the loss. In a worst-case scenario where there is widespread damage, how much will it cost to replace your home or that item?

Click to read more on the benefits of replacement value.

Are you unsure of which option is right for your home? Give us a call today to find out how we can help you. Contact us at (405) 751-8356 today or get a Oklahoma City home insurance quote online.