Market vs Reconstruction Value of Your Colorado Home

Colorado Wildflower

Colorado Homeowners Insurance

How to ensure that your Colorado homeowners policy limits correspond to the cost to rebuild in case of a natural disaster, whether it is a wildfire, tornado or flood. Unlike a home’s resale value (which includes the cost of the land), the cost to rebuild is based on the amount needed to hire a contractor plus building materials and other additional costs.

How Does this Differ from Market Value?

The market value of your Colorado home is the amount a buyer would pay for your home, including the land, no matter how much rebuilding would cost. *Insurance carriers do not insure your home based on the market value, they only insure the building and what it will cost to rebuild the structure.

What is Replacement Cost?

Replacement cost is the rebuilding cost necessary to repair or replace the entire home, including construction costs. This cost is different than the following:

  • The market value
  • The purchase price or the cost of the land
  • The amount owed on a mortgage

How do I Know Replacement Cost?

Get an estimate of the replacement cost of your home from a reputable home inspector. Orcutt Insurance will also calculate the rebuild cost of your home by putting the specs of the building into an MSB Cost Calculator.

Home Improvements

When making a major change, let us know specifics. For example, if you’re replacing a standard bathtub with a whirlpool tub, or if your new countertops are made of marble, your home improvements could add enough value to your home to justify reexamining your coverage limits

We’re Here to Help

Have other questions or doubts? The Orcutt Insurance Group team is ready to assist you in the process of determining the value of your home and purchasing the right coverage to protect your investment. Please contact us for assistance with your Colorado homeowners insurance.

Thank you for your consideration.

The Orcutt Group Team