Determine your homeowners

Woman in flannel shirt stands in front of a desk. She has her laptop open and is taking notes.

From market value to replacement cost, you’ve got a lot to consider when determining the right coverage amount for your home.

Consider insuring your home for at least 100% of estimated replacement cost

Unless you’re Nostradamus, it’s impossible to predict what the exact cost will be to replace your home in the future. It’s important to have enough coverage to account for unforeseen circumstances. So, aim to purchase an amount of coverage at least equal to the estimated replacement cost.

Get a homeowners insurance quote

Market value vs.
replacement cost

Market value vs. replacement cost

What is market value?

The amount a buyer would pay for a home, including the land, regardless of how much it would cost to rebuild the home.

What is replacement cost?

Replacement cost is the cost necessary to repair or replace your entire home. It is not any of the following:

  • Market value of the home
  • The home's or land’s initial purchase price
  • Outstanding amount of any mortgage loan
Learn more about replacement cost

Getting a home value estimate

Getting a home value estimate

Before you purchase a new home, determine the appropriate amount of coverage needed.

  • Ask if a replacement cost estimate1 is available when you have the home value appraised.
  • Consult with your local builder association or a reputable builder for an estimate.
  • Check with your State Farm® agent to help you with this process.

What factors could affect your estimate?

  • Upgraded bathrooms or kitchens (including cabinets)
  • Finished or partially finished basement
  • Additional rooms or living space
  • Custom molding or arched windows
  • Age of the home
  • Other unique features

Why review your homeowners insurance coverage annually?

A house needs dusting. Your homeowners policy might need the same. Improvements, inflation, even the building costs in your neighborhood, might have some influence on your estimated replacement costs year-to-year.

Have you recently remodeled or improved your home?

When you upgrade or improve your home – like replacing your roof -- you may increase your home's estimated replacement cost. Your State Farm agent can help adjust your policy to meet your home insurance coverage needs. As part of your policy's provisions, you have 90 days to notify us of any remodeling or additions to your home that increases its value by $5,000 or more.

Has the inflation rate risen since your last appraisal?

State Farm provides coverage that automatically adjusts each year in an effort to compensate for increases in construction costs in your area. However, certain conditions such as severe weather can increase the demand for labor and materials and raise costs beyond normal inflation. It is important to update your coverage amount each year to keep up with the changing economy.

What influences the building costs in your area?

Market conditions in your area may impact the amount it will cost to rebuild your home if you experience a loss. Replacement cost estimates are influenced by supply of labor, demand for labor and the cost of construction materials. Keeping up with the current market conditions in your area and changing your home insurance coverage amount accordingly, will help you maintain coverage at least equal to 100% of the estimated replacement cost coverage for your home.

Keep in mind what’s not covered by homeowner’s insurance

Keep in mind what’s not covered by homeowner’s insurance

Check your policy for specifics, but most homeowners policies do not cover the following types of losses. You might want some additional coverages.

Natural disasters & other causes

  • Damage from flood or underground water
  • Earthquakes or mudslides
  • Settling, deterioration or contamination
  • Nuclear hazard
  • Animals, birds, or insects


Business pursuits or professional services. Learn more about business owners policies


Ownership, operation, or maintenance of aircraft, motor vehicles and some watercraft

Get help from a local
State Farm agent

Want to know more about homeowners insurance?

Moving? Don’t forget to make insurance changes, too

Find out if you just transfer insurance to the new address or if you need new coverage.

How to be prepared for home insurance reviews

A few helpful things homeowners should keep in mind for home insurance reviews.

First time home buyer tips

Being a first time home buyer can be daunting.

The ins and outs of moving insurance

Your belongings might need protecting while in transit.

Read more Simple Insights on home insurance

Protections to consider with your new home.

Protecting your pets

It wouldn’t be home without them. Are they covered, too?

Creating a home inventory

Learn how and why you should keep a list of all your belongings and their worth.

What are umbrella policies?

It’s additional liability protection for when you want more.

1 Building contractors or professional replacement cost appraisers are a good source for obtaining an estimated replacement cost of your home. Estimates from these sources should reflect your home's features, like those mentioned above. If you are unable to obtain a detailed estimate from these sources, your State Farm agent can discuss other options for estimating the replacement cost of your home.


All coverages are subject to the terms, provisions, exclusions, and conditions in the policy itself and in any endorsements.

State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates) is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third-party sites hyperlinked from this page. State Farm has no discretion to alter, update, or control the content on the hyperlinked, third-party site. Access to third-party sites is at the user's own risk, is being provided for informational purposes only and is not a solicitation to buy or sell any of the products which may be referenced on such third-party sites.

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Bloomington, IL

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