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Replacement Cost vs. Market Value: What’s the Difference?

If you were asked to describe the state of the housing market over the past few years, it could be summarized in one word: unpredictable.

A recent study from Moody’s Analytics found home prices are currently “overvalued” by nearly 25 percent. With this massive fluctuation in real estate values, you may be wondering if your homeowners’ insurance is still providing the right level of protection.

The answer, of course, will depend on your specific homeowner’s policy. But there’s one factor that can make a big difference in the event of a major claim — whether your home is insured using market value or replacement cost.

Replacement Cost vs. Market Value