Here's one article that discusses the difference between replacement cost and market value:http://www.insurance4usa.com/replacemen ... -value.cfm
“There are different methods to determine the value of a house. Market value is the price paid for your house. Replacement cost is the price or cost it will take to rebuild your house in the same spot, same size and same quality of construction, at today's costs. Insurance companies use the replacement cost valuation. These can be two completely different numbers.”
Another valuation term used in property insurance is “actual cash value”, which is replacement cost less depreciation.
The previous advice to ask the different companies to quote using the same valuation is a good idea. You want to compare quotes where both are using the same coinsurance percentage and valuation basis. Actual cash value at 80% coinsurance is going to be a lot different from replacement cost at 100% coinsurance, for example.
You want to make sure there isn’t a coinsurance penalty at the time of a loss because the insurer says you didn’t buy enough insurance for the property, so I’d try to make sure the property has been appraised by the insurer you select and you and the insurer agree on the amount of insurance necessary to meet the coinsurance clause in the policy.
Many wealthy people are little more than janitors of their possessions. | | Frank Lloyd Wright, architect (1867-1959)