We are asked the question quite often. Unfortunately, there is no ”correct” answer. There are many variables in determining what this value should be.

Let’s look at some of the factors in determining this value.  

A note: the reconstruction value is not a “guaranteed” value – it is a “not to exceed” value. There is no guarantee your will receive that full value, if the property can be repaired / rebuilt for less than that value.

First, the “value” (reconstruction value) needs to be defined. The reconstruction value does not include the value of the land. It is only the cost to rebuild the structure. There are several versions of the reconstruction value, including actual cash value (ACV), functional replacement value (FRV) and replacement value REP or RCV). Each of these may vary significantly – and still be correct. Each reconstruction estimator program has different variables and all can be correct. 

As a base value, a “correct” replacement cost value is one that is within 80% of the value calculated by a claim adjus
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