Replacement Cost Calculator

Replacement cost calculator is a worksheet most insurers use to determine reconstruction cost of the insured's dwelling which can be quite different from the initial cost of building the home.

The information you supply to complete the replacement cost calculator includes, but is not limited to, the square footage, number of stories, type of floor coverings, number of bathrooms and fireplaces, and decks or porches for your individual dwelling.

The insurance company will grant Guaranteed Replacement Cost for a homeowner policy if this information is provided. Unfortunately there are different replacement cost calculators and one can bring in a higher value then another. Your premium is based on the end result of this calculation.

Different replacement cost calculators are used for Commercial or Agricultural buildings. Some insurance companies will give the Guaranteed Replacement Cost on these structures.

It is possible to get the same guarantee of replacement for a lower value depending on the calculator form that is used. It has been argued that there should be an agreed upon amount, e.g. $170/square foot for replacement cost on homes. At this point in time this is not done.

The Guaranteed Replacement Cost coverage is important. You want to have this for likely your largest asset, your building. Take the time to review the calculations and to verify that they are correct.