Aug 15, 2018, 11:27 AM
Homeowners insurance is based on replacement cost, which is not the same as market value. Market value is a real estate term based on the sale price of homes in the area. Replacement cost, on the other hand, is an insurance term based on the cost of rebuilding the entire structure in the same location using similar materials. Homeowners insurance requires you to insure your home according to its replacement cost.