Cost To Rebuild A Home

September 14, 2023

When we write a policy for an owned structure, such as a home, condo, or dwelling fire policy, we create a “replacement cost estimator.” This estimator uses the features of your home (such as square footage, number of stories, type of foundation, whether you have solar panels, number/size of bathrooms, upgraded appliances, finish quality of flooring/counters/cabinets, etc.) to calculate the cost of labor and materials to rebuild your home if it is a total loss. This estimated cost is used for your “dwelling limit” – the stated amount of coverage on your policy.

Keep in mind that there are agency-recommended endorsements that provide coverage in addition to the dwelling limit, such as additional replacement cost, building ordinance or law, and more.


On most policies, there is an “inflation guard” endorsement, which increases the dwelling limit at renewal to account for changes to the cost of labor and materials.


We have found that the inflation guard increases have not accurately kept up with the changes to the costs of construction in the last few years – and current renewals span the gamut, with some houses being over-insured and some being under-insured. Being over-insured isn’t great, because you’re paying for coverage you can never take advantage of. Being underinsured isn’t great, because you may not have the coverage you need to “restore you to the condition you previously enjoyed” after a loss.


Let your agent know if you’ve made any updates or renovations to your home that could impact the estimated cost to rebuild (examples could be an addition with more square footage, updating your kitchen/bathroom, replacing your electrical panel, upgrading to a tankless water heater, etc.).

*Did you know that carriers offer discounts for some improvements for things like having a newer roof or loss prevention devices (such as water sensors or hardwired fire alarms, etc.)?