Read your homeowner's insurance policy to understand the policies on replacement value. As you may learn, the replacement cost of a home is not the same as the market value. In other words, the insurance company will not issue a check to you in the same amount as your home's selling price (if it were on the market). The check you will receive will be the cost of building a new, similar home. Market values can fluctuate due to many factors, but the cost to rebuild homes is based on the cost and availability of materials and labor.
Refer to the amount of coverage listed on your homeowner's policy. Your home should be insured for its full replacement cost. Sit down with your insurance agent and discuss the particulars of your home. You will need to cover features such as: square footage, number of bedrooms and bathrooms, kitchen characteristics, basement, fireplace, floor coverings and other features. The insurance agent will use a proprietary formula to generate an estimate of the replacement cost.
Determine the replacement cost by using a free online calculator, such as Building-cost.net. This site uses a questionnaire to determine the replacement value, taking into account your home's building materials, design, quality, size, shape, heating, cooling and geographic area. There are also fee-based replacement cost calculators online, such as Xactware.com and InsureToValue.net. These offer services ranging in price from $8.95 to $19.95.