Estimating your home's replacement cost
How to use the calculator
This calculator can help you estimate the replacement cost of your home. It’s a simple calculation with two variables: the square footage of your home and the average per-foot rebuilding cost for your area.Â
Your area's local rebuild costs can usually be found on the websites of local construction companies or by contacting a contractor yourself. Determining your rebuild costs may not be the most accurate method, but it will likely be on par with the amount provided by your insurer in your initial quote.
Say that you have a 2,000-square-foot home. If local building costs average $100 per square foot, you would be looking at a replacement cost of $200,000. This is based on this formula:
Home sq. ft. x local rebuild cost per sq. ft. = replacement cost value (RCV)
In addition to calculating your home replacement value, you can estimate if you have enough insurance coverage. For this, you need to apply your current dwelling limit coverage, which you can find in your current home insurance policy. The calculator considers the 80% rule to determine if you meet the threshold to be fully covered by your insurance company.
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What is replacement cost coverage?
Replacement cost coverage ensures your damaged property is replaced with new items of similar kind and quality, without deducting for depreciation.
This coverage typically applies to two main parts of your homeowners policy:
Replacement cost vs. actual cash value
The flipside of replacement cost value is actual cash value (ACV), which factors in depreciation when determining your payout.
ACV is rarely used for dwelling coverage and is much more commonly used for personal property. Because of their more limited coverage amounts, policies with actual cash value coverage for the dwelling are typically cheaper than replacement cost insurance policies.
Home insurers have their own methods for calculating home replacement value. Many use software by insurance analytics companies such as Verisk to generate a replacement cost value for your address when you get your initial quote. These estimates are typically in the ballpark, but may not be as accurate as in-person appraisals.
There are a number of free or subscription-based tools available online that can aid in finding your home's replacement value. However, while these calculators typically use a number of location-based metrics, these replacement cost estimator tools are often quite limited in scope and may not be as accurate as other means of appraisal. Still, they can provide another point of reference to ensure that your rebuilt costs are at least generally in the right area.
To get the most accurate estimate, consult a local appraiser who can give you a more in-depth assessment based on your property’s unique features. Appraisers and contractors are likely to have a better sense of local ordinances and building costs, and can do a more thorough job of inspecting your home.
What Does Homeowners Insurance Cover? | The Zebra
What is covered by home insurance depends on the type of policy. Learn which policy is the most comprehensive to ensure you and your property are protected.
How the 80% rule works in homeowners insurance
The 80% rule requires homeowners to insure their property for at least 80% of its replacement value to receive full coverage for damages.[2] If your dwelling coverage falls short, your home insurer will only cover a proportional share of the loss, and your deductible still applies.
Example of the 80% Rule in Action:
- Home Replacement Value: $200,000
- Required Coverage for Full Payout: $160,000 (80% of $200,000)
- Actual Coverage: $150,000
If $100,000 in fire damage occurs:
- The insurer pays 93.75% of the damage ($150,000 ÷ $160,000), or $93,750.
- The homeowner pays the remaining $6,250 out-of-pocket.
To avoid unexpected expenses, ensure your dwelling limit meets or exceeds 80% of your home's replacement value.
RCV vs. market value
While replacement costs are related to rebuilding costs, your home's market value is the price it would fetch on the market. Market value considers factors such as proximity to good schools, crime rates and the land on which your home is built. Replacement cost does not include such factors. For a better idea of what goes into calculating your home's replacement cost, look at the list below.
Factors that determine a home's rebuild cost
Home replacement cost reflects the expense of rebuilding your home to its original standard after a loss. Key factors include:
- Square Footage: Larger homes typically cost more to rebuild due to increased material and labor needs.
- Construction Materials: The type and quality of materials (e.g., brick vs. wood) directly impact costs.Â
- Labor Costs: Regional labor rates can vary significantly, affecting rebuild expenses.
- Architectural Features: Unique designs, custom elements, or historical features often require specialized skills and materials. For example, the type of roof on your home can significantly impact rebuilding costs.
- Home Systems: Costs for plumbing, electrical, and HVAC systems depend on complexity and current material prices.
- Location: Local building codes, accessibility, and environmental risks can influence rebuild costs.
Understanding these factors can help you set an accurate dwelling coverage limit for your policy.
Market trends and building costs:
Inflation and supply chain issues are driving up costs for materials and labor. For example, U.S. lumber prices remain high due to factors like tariffs and fuel costs, even though they’ve stabilized since COVID spikes, according to the National Association of Homebuilders. These material price fluctuations, especially for imports, directly impact the cost of home repairs and replacements.[3]
Upgrades and additions to your home, such as patios, decks, or major renovations, can significantly increase your home's value and rebuild cost. These features should be factored into your replacement value to ensure adequate coverage, especially when attached to your primary dwelling. Always inform your insurer about home improvements or additions to avoid being underinsured in the event of a loss.
Is your home underinsured?
About 64% of U.S. homes are underinsured, meaning they lack enough coverage to fully repair or rebuild after a loss. When getting a homeowners insurance quote, the suggested dwelling limit is based on your information and data from the insurer and third parties. However, this estimate might not reflect your home's actual replacement cost. Be sure to ask your agent how the coverage was calculated to ensure it meets your needs.[4]
To avoid underinsurance:
- Consider Guaranteed Replacement Cost Coverage: This policy add-on protects against rising labor and material costs, covering 10% to 25% above your dwelling limit.
- Update Coverage for Home Improvements: Projects like finishing a basement or adding a patio increase your home’s value. Notify your insurer to adjust your policy accordingly.
Proactive updates and endorsements can help ensure you’re properly covered.
"We often see people wanting to lower their replacement cost coverage to save money, but this can be risky because the cost of living continues to rise. This means that material labor, etc., will rise as well. So, if you continue to insure a rebuild cost of your home the same as you did 5 years ago, that may not be enough to cover all of the damages today."
-Johnny Hawkins, Licensed Insurance Agent and Manager at The Zebra
What's your personal property worth?
Personal property coverage is usually set as a percentage of your dwelling coverage, often around 50%. For example, if your home is insured for $200,000, your belongings would typically be covered up to $100,000. If this amount isn’t sufficient, consider increasing your limit.
Steps to calculate your personal property value:
- Create a Home Inventory: List your belongings, including their estimated value. This helps ensure you’re properly insured and simplifies claims in case of a loss.
- Account for High-Value Items: For valuables like jewelry, artwork, or instruments, consider a scheduled property endorsement to provide additional coverage beyond standard limits.
This process applies to both homeowners and renters policies, offering peace of mind that your belongings are adequately protected.
How to create a home inventory
While it can seem tedious, putting together a home inventory for insurance purposes is easier than you might think, and it can come in handy in the event of a loss. Creating a home inventory ensures your belongings are well-documented for insurance purposes. Here’s how to get started:
- Start Small: Begin with one room or a single category (e.g., electronics).
- Record Key Details: Note descriptions, purchase dates, prices, and serial numbers.
- Use Technology: Take photos or videos and try inventory apps to stay organized.
- Focus on High-Value Items: Document jewelry, art, and collectibles for potential additional coverage.
- Keep it Safe: Store your inventory securely with backups, like the cloud or a safe deposit box.[5]
Zebra tip: Try to get RCV coverage for your personal belongings
Replacement cost coverage (RCV) for personal property is standard in many homeowners policies, reimbursing the full cost to replace items. However, some policies still use actual cash value (ACV) deducted for depreciation, resulting in a lower payout.
More comprehensive policies, like HO-5, often include RCV by default, but it’s always smart to check your policy documents to confirm. If your belongings aren’t fully covered, contact your insurer about upgrading to RCV for added peace of mind.
Keep your home properly covered
In a recent survey, almost 25% of respondents said they aren't confident that their personal property is adequately covered.[6]
Reviewing your dwelling coverage every few years is a smart way to stay protected without overspending. Inflation and rising costs mean your home’s replacement value might need updating—talk to an insurance agent or local contractor to make sure you're covered.
If higher coverage feels out of reach, don’t worry—budget-friendly policies are available. The Zebra makes it easy to compare homeowners quotes from top insurance companies. Just enter your ZIP below to explore affordable options!
Compare home insurance quotes side-by-side.
Home replacement FAQs
Insurance for Your House and Personal Possessions. Insurance Information Insitute
What is the 80% Rule in Homeowners Insurance? Kiplinger
How Soaring Prices for Building Materials Impact Housing. NAHB
Report: How many US homes are underinsured? Kin Insurance
How to create a home inventory. Insurance Information Insitute
Monthly user surveys via the Marble App. The Zebra
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- Actual Cash Value vs. Replacement Cost
Behind the words: Meet our authors
About The Zebra
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
- The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
- The Zebra’s insurance editorial content is not subject to review or alteration by insurance companies or partners.
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