When choosing a home insurance policy, it’s important to understand the difference between market value and replacement cost. Perry Insurance Agency, in Vernal, UT is here to explain your options. 

What are Market Value and Replacement Cost Used For? 

Market value or replacement cost can be used to determine how much you will receive for your insurance claim. If your home is damaged or destroyed, your insurance company will use one of these methods to determine how much you will be reimbursed up to the coverage limit. 

What is Market Value?

Market value is essentially what your home could be expected to sell for. It considers the value of the land and improvements to the house and can also include personal property and intangible assets. 

What is the Replacement Cost? 

Using modern methods and materials, the replacement cost determines how much it would cost to build your home, or one very similar, based on current prices. This includes the cost of labor and materials.

Which is Better? 

Which value is higher will depend on market factors. If the real estate market is doing very well, the market value may be higher. If there’s a high demand for construction, replacement value could provide the best value. 

Market value is considered a gamble. It may be higher or lower than the cost of replacing or repairing your home. 

Replacement cost is usually considered the better option because it gives you the funds to replace or repair your home. Replacement cost should equal the actual cost of repairs or a new home of similar value. 

Home Insurance with Perry Insurance Agency

If you need home insurance in Vernal, UT, contact Perry Insurance Agency. Our trusted agents will discuss your options and help you select the best policy for your needs.