One of the most important yet often misunderstood considerations when reviewing a home insurance policy is the difference between a property's market value and a home's replacement cost. They are very different things, and in the event of a claim event, not knowing this can come back to zing you if you aren’t careful.
Market value is, in essence, the price of a home agreed upon by a seller and buyer. When someone is buying a home, he is buying the following:
The house itself, which can include personal belongings like furniture or curtains
The land on which the house sits
Any other structures on the property like fences, tool sheds, or gazebos
Intangible assets like the neighborhood, convenience and school zones