Your homeowner’s insurance should cover the cost of rebuilding your home. The price you paid when purchasing your home, or its current market price, are likely less than the amount to rebuild. Another important note here is that your homeowner’s insurance limit may not adequately cover the rebuild, because the limit is based on your mortgage. Your insurer provides a recommended coverage limit for the structure of your home. Your insurance policy also helps to replace damaged or displaced appliances. Your policy’s Additional Living Expenses (ALE) coverage should shield you from the blow of having to temporarily stay at a hotel, or seek other accommodations, for any amount of time while your home is being worked on.
There are certain things that could add to your rebuilding cost, like additions that you’ve made while living in the home. Other items that could bring up the cost are the style of the house, materials used and types of exterior and interior wall construction, the number of rooms and bathrooms. Factors, such as a shed or garage, custom builds, and improvements made to add value to the home will also add to the cost. If your home is not up to code, the expectation that it will be built up to code may also add to the cost. If you have a modified replacement cost policy this would help you update from the older out-of-date materials, because your policy would pay for today’s standard materials and construction techniques.