Have you ever wondered why your home is insured for more than it is actually worth on the market?

This is because the Market Value of your home is the price one would pay for a home in its current condition.  Insurance companies use what is called a Replacement Cost Value, this is the price it would cost to rebuild your home in the same location, same size and same quality of construction at today’s building costs.

Market Value = Used materials, Replacement Cost = New materials

Do you know how your commercial property policy would respond in the event of a loss?  The kind of valuation that your policy has can make a big difference in how much you could be reimbursed for a claim.

RC or Replacement Cost is simply the cost to replace an item or structure with like kind and quality to its pre-loss condition, not to exceed the policy limit.  In other words, it will pay to replace the damaged or stolen property and does not take into consideration the depreciation of the item.  This is usually the most favorable to the policyholder.