Market Value vs. Replacement Cost (Insurance)

[Justin Sloan]

DON'T BECOME A VICTIM OF UNDER-INSURING YOUR PROPERTY!

Make sure when you are insuring your property you are doing so based on the "replacement cost" value and not "market value" (also known as purchase price). Typically (in most states / housing markets) market value (what you pay for the property) is usually less than what it would cost to rebuild the structure (replacement cost). If you insure your property based on market value and not the true replacement cost (in most situations) you will get penalized by your insurance company for not "insuring it to value" properly.

There are ways to get around this but it's best to insure your property to (the proper) value!