Replacement Cost

Replacement cost value is the basis for setting dwelling coverage limits. It reflects construction costs — labor, materials, and code requirements — rather than what a buyer would pay, which also includes land and location. A home can have a high market price but a much lower replacement cost, or vice versa.

Underwriters compare the requested coverage limit against an independent replacement-cost figure to avoid under- or over-insuring. In a PerilGrid report that figure comes from the property record for the address — an assessor building-cost value or a property-data estimate. When the record has no figure, the report says so instead of estimating one.