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Market Value vs. Replacement Cost

Updated: Oct 26

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


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

Replacement Cost