Estimate how much it would cost to rebuild your home from scratch — the number your dwelling coverage should be based on.
Your homeowners insurance dwelling coverage should be based on your home's replacement cost, not its market value. Market value includes land, location premium, and market conditions — none of which matter when rebuilding after a total loss.
Replacement cost is the amount it would take to rebuild your home from the foundation up using current labor rates and building materials in your area. In Texas, the average cost per square foot ranges from $109 for basic construction to $279 for custom luxury finishes.
Construction costs have risen significantly since 2020 due to lumber prices, supply chain disruptions, and labor shortages. If you haven't updated your dwelling coverage recently, you may be underinsured. We recommend reviewing your replacement cost estimate annually and adding a guaranteed replacement cost or extended replacement cost endorsement if your insurer offers one.
A common mistake is insuring your home for its purchase price or tax assessment value. A $350,000 home on a $150,000 lot only needs $200,000+ in dwelling coverage — but rebuilding that same structure might cost $280,000 at today's rates. Always base your coverage on what it costs to rebuild, not what you paid.
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