Direct answer
You generally need enough coverage to equal the total replacement cost of your home, which depends on local construction labor rates and material costs rather than your property’s market value. It depends on whether you choose actual cash value coverage, which accounts for depreciation, or replacement cost coverage, which pays to rebuild the structure as new.
Standard homeowner policy guidelines from state insurance departments regarding replacement cost valuations. For additional information about understanding replacement cost coverage, see the National Association of Insurance Commissioners website.
What this means for you
You generally need enough coverage to equal the total replacement cost of your home, which depends on local construction labor rates and material costs rather than your property’s market value. It depends on whether you choose actual cash value coverage, which accounts for depreciation, or replacement cost coverage, which pays to rebuild the structure as new.
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This page is informational and not a coverage guarantee or quote.