Home replacement cost.

Worked example

A 2,000 sq ft home at $200 a sq ft is $400,000. Add a 400 sq ft garage at $80 ($32,000) and $10,000 of extras for $442,000, then a 10% local adjustment for $486,200 and a 5% debris and permit allowance of $24,310. The estimated replacement cost is $510,510, or $255 per sq ft of living area. 80% of that is $408,408. Dwelling coverage of $450,000 is 88.1% of the estimate: above 80% but $60,510 short of 100%.

How it works

Replacement cost = (floor area x cost per sq ft + garage area x garage cost + extras) x (1 + local adjustment) x (1 + allowance). Replacement cost is the cost of current materials and labour to rebuild the structure; it is not the market value, which includes land. Where you can, get a rebuild estimate from your insurer or a local builder, because the cost per square foot is the biggest driver here and this tool has no regional data.

Sources and basis (opened 2026-10-08): arithmetic on the cost per square foot and percentages you enter; no cost data is built in. The distinction between replacement cost and market value, and the 80% guideline, are described by Liberty Mutual, “What is the 80% rule for home insurance?” (page updated September 14, 2026).

FAQ

What is replacement cost for home insurance?

It is what it would cost to rebuild or repair the home with materials of similar kind and quality at today’s prices. It is not the same as market value, which includes the land.

How do I estimate replacement cost?

Multiply the floor area by a rebuild cost per square foot from a local builder or your insurer, then add the garage and extras. This calculator does that and applies a local adjustment and allowance.

Should I insure for market value?

No. Market value includes land and location, which a fire does not destroy. Dwelling coverage is normally set against the cost to rebuild.

What is the 80% mark?

Many home policies expect the dwelling limit to be at least 80% of replacement cost. See the 80% rule calculator for what happens to a claim below that line.

Is the answer exact?

No. It is only as good as the cost per square foot you enter. Ask your insurer for a rebuild estimate and review it every year.