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Replacement Cost vs Market Value

Replacement Cost vs Market Value



By Jeff Dickson, CIC Glendale Insurance, LLC
602 843 1802
Although market values for both business and homes have decreased in the past 12 to 18 months, thereplacement cost of real property (buildings) has decreased very little, if any.

I bring this to your attention for a day does not go by in our agency when one of our clients calls to get a quote on the new (?) value of their home due to the decline in market value. The agents in our office then remind our client the value shown in the homeowner policy is the replacement cost valuewhich the insurance policies respond to and not the market value.

Some items of importance you should think about in regards to your homeowner policy…

  • *Does your policy provide guaranteed replacement cost or extended replacement cost protection?
  • *Discounts! As an independent agency, we represent not one, but multiple, highly rated insurance carriers which offer a variety of discounts. Are you receiving all the discounts you are entitled to????
  • *Does your policy provide some type of identity theft protection?
  • *Increase your personal liability limits. It is a matter of a few dollars annually to increase a limit of $100,000 up to $300,000, $500,000 or $1,000,000.
  • *Excess liability policies continue to be inexpensive to purchase. Do you own a pool, cars, pets, recreation vehicle? Do you have teenage drivers? These are a few examples of why you need to purchase excess liability protection.
  • *Think about higher deductibles. Would you really turn in a claim that was less than $500 or $1,000??? Probably not, so take the premium credit allowed when you select higher deductibles.
  • *Quite a number of insurance carriers have liability exclusions for certain pets or for having a trampoline, to name a few examples. Check your policy exclusions.



The information provided above is general in nature. Protection varies by company and by policy. We welcome your questions.

Please call us for a free review of your policies without any hassles!
602 843 1802