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Actual Home Valuation vs. Replacement Cost: What’s Your Home Really Worth?

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The true value of your property may surprise you.

Can you estimate how much your home is worth? The first thing that likely comes to mind is market value. But a home is much more than just the structure. Consider all of the things inside your home that you care about. Custom furniture. Unique craftsmanship. Family antiques. Art or special collections. Can you put a dollar value on that Are you certain that your insurance will cover the cost to replace everything you love about your home inside and out?

An experienced agent should look at the true replacement value of your home and everything in it.  This value is important to understanding how much your home is really worth.


Custom Homes Need Custom Policies

By their nature, custom and high-value homes are unique. That is what makes them special, and valuable.  Doing an in-depth review of your home with an experienced agent and a team of underwriters and appraisers is the best way be certain you are covered.

Contact Garrett Hall

“In starting conversations with folks that have custom homes, I have often found that their homes and possessions are either undervalued or underinsured,” said Garrett Hall, personal insurance specialist for PayneWest.  “That is where we go to work to make sure we are using all of our knowledge and resources to give them a clear picture of the value of their home and possessions.”

Garrett recently worked with a new client who had purchased a home where a previous owner had done over $250,000 in renovations to a beautiful custom kitchen.  Based on a prior simple valuation of homes in the area, the client’s current policy only valued their home at $117 per square foot.  After doing an in-depth review and inspection of the home inside and out and an estimation of the materials and labor cost association with replacing the home as is, Garrett recommended that the home be insured at $300 per square foot.

“After our review, we had a good conversation. I said, ‘If you were to have a total-loss, you are more than 50% underinsured. You would likely have to come up with $800,000 of your own money to replace your home and everything in it,” said Hall.


Doing the Math and Providing an Accurate Estimate

A homeowner may scratch their head and wonder how agents could provide such differing estimates and recommendations for coverage.  For Hall, it comes down to education and transparency. It starts with establishing a solid baseline for coverage, but goes beyond simple valuations.

“For me, it begins with my knowledge of the local area and working with experienced underwriters to look at the valuation of homes of the same quality that were built with similar materials, but this is just the beginning,” he said. “From there I have conversations clients about what makes their home unique, including custom design, materials, and then we talk about what is important to them.”

From these conversations, you can learn a lot. Recently, Hall worked with a client who shared that he had a special collection of antique maps that had never really been properly appraised. Garrett recommended that they work with an experienced appraiser to make sure they were properly accounted for and insured.

“This was a really neat, unique collection. While they may be ‘irreplaceable,’ this collection does have intrinsic value. This appraisal was not only important for insurance but also for estate planning in the future.”

After determining the actual value of the collection, Hall could provide options for coverage, whether under the current homeowner’s policy or specialty coverage.

“I want to make sure the client has all of the information and has options. Because we have the ability to provide a variety of coverage through a variety of carriers, the client can then take the information and decide how they want to cover what is important and valuable to them.”

He believes this educational and consultative approach set him and his PayneWest colleagues apart when looking at home valuation and replacement cost.

“Some agents are unwilling or don’t know how to have these types of conversations and that is unfortunate. When you are looking at proper valuation and proper coverage, there is potential that you may have to discuss higher premiums or costs. But the cost of not having that conversation is much greater.”


Garrett Hall is a risk manager and insurance broker at PayneWest Insurance. Contact Garrett at or 971.888.7411.

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