What is a Replacement Cost Estimator?

How much does it cost to build?

A home replacement cost estimator is a tool used by insurance companies to calculate the cost of rebuilding a home in the event of a total loss. An accurate estimate will help you to obtain the correct amount of insurance, preventing you from being under-insured. It’s a complicated and intricate calculation, based on multiple data points and algorithms, which helps inform the home owner and insurance company what’s the best kind of coverage.

What to keep in mind:

1. It’s an estimate. An RCE factors many different variables, including costs of materials, construction type, features of the home, type of roofing, age, permits, labor costs, square footage, interior and exterior finishes, etc. However, this will not be perfectly accurate, as there are many factors that can change and affect the final cost.

2. RCE is not the same as market value. A house that costs $500,000 to build may be located in a multi-million dollar neighborhood. But the cost to rebuild it from the ground up would still be $500,000. Market value is based on the appraisal, which takes into consideration nearby property sales, land value, neighborhood, etc.

3. An accurate estimate helps everyone. It’s a terrible feeling to realize you’re underinsured after a disaster. Having an accurate estimate can show you any gaps in your insurance, and allows the underwriters or insurance companies know the kind of coverage you need. Don’t get caught unprepared, or worse, unaware.