Home Reconstruction Cost vs. Replacement Coverage Calculator (2025 Edition)
Compare your current home insurance coverage against the estimated cost to rebuild, and see if you're underinsured.
Key driver for reconstruction cost
Regional labor/material cost factor
Adjusts cost multiplier
For depreciation factor
From current policy
For target threshold
This calculator estimates your home's true reconstruction cost, the amount required to completely rebuild your house after a total loss (like a fire or natural disaster). It then compares that figure to your current insurance replacement coverage, showing whether you're fully protected or underinsured.
| Comparison | Market Value | Replacement Cost |
|---|---|---|
| Definition | What your home would sell for | What it costs to rebuild the structure |
| Includes Land? | ✅ Yes | ❌ No |
| Affected by Market? | ✅ Yes | ❌ No |
| Used for Insurance? | ❌ No | ✅ Yes |
| Example | Market value = $500K, rebuild = $450K | N/A |
Tip: Always insure for replacement cost, not market value, to avoid a shortfall in the event of a total loss.
| Home Size | Avg. Cost per Sq. Ft | Total Rebuild Cost |
|---|---|---|
| 1,500 sq ft | $180 | $270,000 |
| 2,000 sq ft | $200 | $400,000 |
| 2,500 sq ft | $210 | $525,000 |
| 3,000 sq ft | $220 | $660,000 |
Source: NAHB & CoreLogic Building Cost Index (2025). Costs vary by region, coastal and urban zones can exceed $300/sq ft.
Local construction labor rates
Regional wage differences significantly affect rebuild costs.
Material cost inflation (lumber, steel, concrete)
Rising material costs can increase rebuild estimates annually.
Architectural complexity (multi-level or custom finishes)
Complex designs require more labor and specialized materials.
Foundation and structural type
Basements, crawl spaces, and foundation types affect costs.
Age and building code upgrades
Older homes may need code compliance upgrades during rebuild.
You may not receive enough payout to rebuild completely
Coverage gaps mean you'll pay out of pocket for the difference.
Insurers may apply co-insurance penalties for being underinsured
Some policies reduce payouts if you're significantly underinsured.
Renovations and inflation often raise rebuild cost faster than coverage updates
Regular coverage reviews are essential to maintain adequate protection.
- Review your policy annually to adjust coverage
- Add "Extended Replacement Cost" endorsements (+10–25% buffer)
- Document renovations to ensure insurer accuracy
- Use inflation guard or auto-adjustment features
Q1: Is reconstruction cost higher than market value?
A: Often, yes, labor, materials, and demolition drive costs above property resale price.
Q2: Should I include land in the coverage amount?
A: No. Land value is not insurable, only structure and improvements.
Q3: Can inflation make me underinsured?
A: Absolutely, material and labor spikes can widen coverage gaps within a year.
Q4: How often should I update my replacement estimate?
A: Annually or after any major renovation or home upgrade.