Home insurance policy vs. what your house is actually worth

[Anonymous]

How do these typically compare? We bought our house last year for $800k. It's a small but updated ranch with a finished basement. Our insurance policy "dwelling" (rebuild I guess) limit is only $475k because that is what they deemed this structure to be worth, but in an area like this that is so expensive, am I correct in believing that no one will build you a livable house for that little amount of money? FWIW, according to the county tax assessment our house is worth $435k (the land value making up the rest of the $800k).

[Anonymous]

This is very hard to tell- we ended up going with a policy that covers replacement costs. You don’t say how big your house is, but $200/sq ft might be one way to estimate it.

[Anonymous]

Definitely get a policy with replacement cost.

[Anonymous]

A lot of the value in the purchase price is the land your house sits on. (In my neighborhood, that's ballpark of 500k for a 9,000 sf lot.)

Insurers aren't insuring the land.

Replacement value is where you want to be. And make sure replacement for contents is included. Riders for the things that need it - expensive jewelry, art, cameras, etc.

Don't forget to document your contents, even if you just wander around your home taking a video once every couple years.

[Anonymous]

OP here - sorry, I should have clarified that $425k is the estimated replacement cost. But are there any builders who would actually build a house for that cheap?