Financial Planning

The Cost of Rebuilding After an Emergency

Most people are unaware their homeowner's insurance should be based on the cost of rebuilding not the market value of their property. Mistakes like this can hurt your coverage and monthly budget.

Is Your Budget Big Enough To Rebuild Your Home?

If you were to experience a serious tragedy to your home such as a fire, it’s your homeowner’s policy that will provide you with the money you’ll need to rebuild your home and replace your personal property after a covered loss. Unfortunately, many people are unaware that the limits you set on your homeowner’s insurance policy should be based on the cost of rebuilding, not on the market value of your property or the price you paid for it.

Mistakes such as this could have you underinsuring your home and not having enough coverage, or over insuring your home and paying too much out of your family’s budget. Fortunately, you have some good resources to tap into when it comes to estimating the cost to rebuild your home and to get the insurance coverage that you need.

In addition to conducting a thorough inventory of your personal property, you’ll need to get an estimate of the costs to rebuild your home back to its “like” condition before the covered loss. There are a couple of good ways to do this. Here are two:

Check with your insurance agent.

The easiest way to determine what you should be insuring your home for is to ask your insurance agent to run a cost estimator. Most insurance agents use some type of online tool that can help you determine the cost to rebuild your home. These type of estimators consider some of the basics, such as your home’s age and square footage, as well as any special features and/or materials such as granite counters or hardwood floors. Based on this information, your agent can help you estimate additional costs associate with rebuilding such as the cost of labor and materials, the removal and disposal of debris, as well as building permits. Factoring in these additional costs will save you from throwing off your monthly budget.

Use an online calculator.

There are several good websites with online replacement value cost calculators that will not only provide you with a cost estimate to rebuild your home, but also provide a cost estimate for replacing all of your personal property (contents). Most are quick, free, and easy to use, and allow you to print out your completed report to present to your insurance agent. Give these a try: Budget Direct, Relator.com, and Need2Know.

Once you have an estimated cost to rebuild your home and the value of all your personal property, the total of both should provide you with a reasonable value in which to insure your home and contents. It may also prevent you from buying more insurance than you need and overpaying for coverage allowing more of your budget to be spent elsewhere.


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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Family Budget

Your home is one of your most valuable assets. Paying for it, maintaining it and protecting it are likely make-up large portions of your family budget. In addition to shopping around for the best rates and properly budgeting for your homeowner's insurance, make sure that your homeowner's policy has the right limits. You want to be sure to have enough coverage in the event of a loss to rebuild your home back to its original condition. Securing the right coverage can also prevent you from overpaying for insurance you don't need and putting a strain on your family budget. For more information, visit the Protective learning center.

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