This document discusses the differences between replacement cost and market value for home insurance policies in Texas. It notes that most homeowners are underinsured by about 18% on average, meaning they would be responsible for the first $36,000 if their home was destroyed. Replacement cost, which is what is needed to rebuild the home, is usually higher than the market value and does not take depreciation into account. Homeowners are advised to review their policy limits annually with their agent to ensure adequate replacement coverage. Contact information is provided to get a free home insurance quote.

1. Texas Home Insurance-Replacement
Cost vs. Market Value
Call Melliand Insurance at 972-346-
4666 for a free complementary quote
for Texas home insurance or visit
www.insurancemadeeasy.us

2. • Your Texas home can encounter a number of
possible hazards that can strike disaster.
• A recent survey by Marshall & Swift/Boekl, a
replacement cost data service company, found
that 66% of homeowners had inadequate
coverage by an average of 18%.

3. • That is $36,000 for a $200,000 home.
• A majority of Texas homes have a standard 1%
deductible on their Texas home insurance
policy.
• Few people would choose a $36,000
deductible.
• However, that is the net result of being under-
insured trying to protect one of your most
valuable assets.

4. Replacement Cost vs. Market Value
• The market value to sell your home today is
very different than the amount of
replacement cost needed to rebuild your
home.
• Market value takes into account land value,
depreciation, and other market factors.

5. • Replacement cost simply takes into account
the cost to rebuild a new home.
• These numbers can vary substantially.
• For example, you could have one home that is
worth $400,000 in one neighborhood while an
identical home across town could have a
market value of half that amount.

6. • Its all about location with market value.
• The first home might be lake front property
compared to the latter that is in a different zip
code area and has railroad tracks behind it.
• However, actually replacing these homes
(rebuilding them in place using similar
construction methods and materials) would
essentially cost the same for both.

7. • Review your Texas home insurance policy with
your agent each year. Replacement cost goes
up each year as the cost of building materials
increases.
• Factors such as custom or luxury kitchens can
add significantly to the rebuilding cost.
• Square footage is also a main determinate for
a home’s replacement cost.

8. • It’s been my experience to factor in a higher
square footage cost for a one story home
compared to a two story.
• Lets compare a 2000 square ft. two story to a
2000 square ft. one story. Imagine the two story
has 1,000 square feet on the first floor and 1000
square feet on the second floor.
• The one story will have a larger foundation and
larger roof making it more expensive to replace
per square footage.

9. Contact Information
• Call Melliand Insurance at 972-346-4666 for a
free complementary quote.
• Or fax in your declaration page to 972-346-
4667 with your date of birth and claims loss
history in the past 5 years.
• Or visit www.insurancemadeeasy.us and fill
out a home insurance quote form.