Recently we have been receiving a number of calls regarding the value of their homes. With the real estate market down considerably many people think that they should be able to reduce the value of their dwelling coverage on their insurance policy. many homeowners equate the worth of a home to its market value especially if the home was a recent purchase. While the market value is a valid calculation of a homes worth for buying and selling it has little to do with the cost of rebuilding. What your insurance policy is intended to do is to rebuild your home when destroyed by a covered peril. There are several factors that go into the calculation of the replacement cost of a home which I will just name a few. After a disaster such as a tornado the cost of building materials and rise because of increase demand. Repair work to a partially destroyed home is done from the top of the home down. This is more time consuming and labor intensive. Changes to building codes may require costly updating even for undamaged parts to the home. Let’s not forget demolition costs which you would not have if you built a new home. The replacement cost of your home will be higher than the market value or tax value. I hope this will help you understand why we have to insure your home for its replacement value, you will be glad you did in the event of a loss.