The wRight Way To Insure Property


4th Quarter 2020: Reconstruction costs increased in all states.  Combined costs for  material composites increased 14.5% from October 2019 to October 2020, compared with 3.9% from July 2019 to July 2020. Costs were up for all categories. Lumber costs were the extreme outlier at 59.7% as the market reflected high demand driven by an increase in building activity; supply shortages stemming from shutdowns related to the pandemic; and U.S. tariffs on Canadian lumber. Carpet was a distant second with a 6.5% increase, and interior trim followed at 3.1%. The remaining categories increased just 1.1% to 2.4%.

VALUATION METHODS: Replacement Cost, Functional Replacement Cost, & ACV

VALUATION METHODS: Replacement Cost, Functional Replacement Cost, & ACV

Property insurance is designed to replace your property just as it was one millisecond before a loss.  How much money you receive following a loss depends on the valuation method used to determine your loss.  There are several commonly used valuation methods:

"Replacement Cost" pays for the cost to repair or replace your property without deduction for depreciation.  Sometimes this may result in new for old.

"Guaranteed Replacement Cost" pays for the cost to repair or replace your property without deduction for depreciation even if the cost exceeds the limit on your policy

"Historical Replacement Cost" pays for the cost to repair or replace your property without deduction for depreciation but with historically equivalent materials (e.g. lead glass, ornate wood carving, hand painted murals, etc.).

"Functional Replacement Cost" pays to replace your property with materials that are functionally equivalent to the original property.  This can be problematic in that inferior materials are often used in lieu of original type materials.

"Actual Cash Value" pays to replace your damaged property after the insurance adjuster deducts the useful life of your property.  This can be problematic in "useful life" can sometimes significantly reduce the claims payment.

"Stated Amount or Agreed Value" means your insurance company will pay you the pre-loss agreed upon amount as listed on your policy regardless of whether or not you repair or replace your property.

"Stock Valuation" pays you for what you originally paid for the property.  This valuation method is only used in businesses like antique dealers, etc.  This is not available on personal policies.

All of these valuation methods differ dramatically from "market value" which is the current sales value of real estate; and the cost you paid to acquire your property.  Insurance is not designed to reflect current market valuations or the original cost of acquiring property.

We recommend speaking with your agent to determine which valuation method is best for you.

Click here to watch a brief video explanation of the difference between Replacement Cost and Actual Cash Value.

Know what's covered...and what's excluded

Know what's covered...and what's excluded

There are 3 types of "Causes of Loss" for which Property insurance responds.  Before purchasing insurance, speak with your agent as to which Cause of Loss is best suited for you.

"Basic" causes of Loss include: fire; lightning; explosion; windstorm & hail but not frost, cold weather, ice, snow or sleet); smoke; aircraft or vehicle; riot or civil commotion; vandalism; sprinkler leakage; sinkhole collapse; volcanic action.  Caution: depending on circumstances, some of these causes may be specifically excluded from coverage.

"Broad" causes of Loss include: same perils as in "Basic" plus falling objects; weight of ice, sleet or snow; water damage (excluding flood).

"Special" causes of loss include: any peril except those which are specifically excluded.


  • Earth Movement (including earthquake, landslide, mudslide, and mine subsidence).
  • Water (flood, surface water, rapid snow melt, etc.)
  • Governmental Seizure or Destruction
  • Nuclear Radiation or Contamination
  • Fungus, Wet Rot, Dry Rot, Bacteria

NOTE: For an additional premium, you can add coverage for either or both Earth Movement & Water.