How do you establish the cost of replacement for homeowners insurance policies?
Do you use localized real estate and construction costs to come up with that amount?
Similar to how individual companies have different underwriting methods to determine rates, every insurer figures their replacement cost for a home differently. Some use tax records, mortgage info, average property values, and other data. The local real estate market is not really the best guide, as the value of a home can be far more (or less) depending on a number of factors that make the location more or less desirable (access to good schools, crime rates, etc...).