Info on Grand Rapids Real Estate

Reconstruction Cost vs. Market Value On A Home Purchase

When it comes to insuring your home, make sure you know the difference between insuring by the Reconstruction Cost versus insuring by the actual Market Value.  The reconstruction cost is the amount it would cost to actually rebuild your home if there was a total lost.  The Market Value is what you bought the home for or what it was appraised at.

For instance, you may have an older Victorian style home here in Heritage Hills which was built in the early 1900’s and has a market value of $180,000, but actually reconstruction cost of the home may be much over $250,000 due to the size and way the home was built. 

The opposite is also true; you may have a regular size home on Lake Michigan or on 100 acres of land which has a market value over $500,000, but an insurance company doesn’t need to insure the lake front view or your land, they just need to insure the home.

I’ll get into more detail on how Farmers and other insurance companies calculate reconstruction cost in future blogs.   Be sure and leave any comments or concerns on the contact us link.

Contributed to by:

David Gregwer at Farmers Insurance


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