The Importance of Replacement Cost vs. Market Value

Disaster can strike at any time, so most individuals are not immune to personal loss regardless of season.

A recent survey found that most homeowners are seriously underinsured. Marshall & Swift/Boekh (MSB), a leading insurance data services company, found that 66-percent of homeowners had inadequate coverage by an average of 18-percent. That works out to $36,000 for a typical $200,000 home.

While few people would willingly choose a policy with a $36,000 deductible, it ultimately is the net result of being underinsured on what may well be their most valuable asset.

Market Value vs. Replacement Cost

The market value — or what your home would sell for today — is very different from replacement cost coverage, which is the amount necessary to properly insure the rebuilding of your home. Market value takes into consideration the land value, depreciation and other nearby market factors while the replacement cost simply reflects the cost to rebuild a home. These can be very different numbers.

For example, you can have a home that is worth $400,000 in one neighborhood while an identical home across town could have a market value of half that much, even assuming they were built on lots of equal size. But actually replacing those homes — rebuilding them in place using similar construction methods and materials — would essentially cost the same for both. Rebuilding costs can be higher or lower than market values, since factors like land value and depreication don’t affect rebuilding.

Separate Structures

Separate structures, sometimes referred to as “other structures” or “Coverage B,” refer to any structure that is on your property, but not attached to your main house. Examples of separate structures include:

  • Detached garage
  • Fence
  • Garden shed
  • Detached in-law unit
  • Retaining walls
  • Swimming pool
  • Outdoor kitchen

Most homeowner policies automatically include separate structures insurance (Coverage B) that equals 10-percent of the amount of insurance on the main house (Coverage A). If the number and value of separate structures are significant, such as the detached living quarters — or others beyond just one of the items listed above — a separate valuation should be done for each to determine if extra coverage is needed.

Contents Coverage

Your homeowner’s policy will automatically include personal property coverage, which is a separate item sometimes known as “Coverage C” that can equal 50-percent to 75-percent of the Coverage A amount. If you have a typical amount of personal property in your home, this may be adequate.

However, if you have a significant amount of personal property or you have higher value items, then you may want to discuss an additional amount of coverage with us. Items such as jewelry, guns, coins, computers, business and high risk property typically have policy sub-limits, some of which may be $1,000 or less.

Such special items should be discussed with Gunn Mowery, especially if they are valued over $1,000. A homeowner’s policy has many options to increase these personal property coverage amounts.

For more information on homeowner’s coverage, please contact Gunn Mowery at 1-800-840-1243. You can also reach us via email at or visit our website at Become our Facebook fan at

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Gunn-Mowery accepts no liability for the content of this blog post, or for the consequences of any actions taken on the basis of the information provided. If you are not the intended recipient, you are notified that disclosing, copying, distributing, or taking any action in reliance on the contents of this information is strictly prohibited. Content that appears is not intended to substitute for personalized professional insurance advice.

Gunn Mowery featured in recent segment for ABC27

An October 31 report by ABC27’s Megan Healey recently disclosed information on how one homeowner in the midstate was dealing with Hurricane Sandy. Some property owners, the report states, aren’t waiting for insurance adjusters to schedule evaluations of their homes after unexpected damages occur as a result of natural disasters like Hurricane Sandy.

So the Pennbrook area resident featured in the report, as Healey states, took “matters into his own hands,” hiring a tree removal service to cut down a tree which struck his home during the hurricane. Healey interviewed Gunn Mowery Vice President Gary Harshbarger during the segment to examine if the practice was smart for a homeowner.

“One of the very important things is to prevent further damage,” Harshbarger suggested in the segment. He later added “homeowners are encouraged to take steps to repair damage right away because it cuts down on the risk of future damage.”

As long as the homeowner keeps detailed receipts of the tree removal job, Harshbarger said, reimbursment of the job would not be an issue. Harshbarger also recommended receiving a second estimate, taking pictures, documenting and/or keeping damaged property.

“The adjuster will want to see that, but there is really nothing that says you have to have an adjuster see that while it’s in a damaged state,” Harshbarger added.

Another important issue, the report said, was to make sure the damage-repair company used in the removal process was insured, in case they further damaged your home. In that case, the report states, the company’s coverage would kick in.

To see the entire video, click here.

Important News Regarding Hurricane Sandy

As of Monday morning, Hurricane Sandy was just beginning to take shape in Central Pennsylvania. The National Weather Service is reporting that rain and gale force winds are expected to hit the region the hardest Monday afternoon through Tuesday.

The United States of Homeland Security’s Federal Emergency Management Agency (FEMA) also issued a report recently that federal emergency aid has been made available to the Commonwealth of Pennsylvania to “supplement commonwealth and local response efforts due to the emergency conditions resulting from Hurricane Sandy beginning October 26, 2012.” To read more, click here.

The National Weather Service has issued a High Wind Warning in Central Pennsylvania as of 5 a.m. on Monday, October 31st.

A High Wind Warning remains in effect from 8 am this morning to noon EDT Tuesday.

  • Winds: increasing from the north to sustained speeds of 30 to 40 mph, with gusts between 60 and 70 mph.
  • Timing: beginning late this morning. The strong winds will last through Tuesday morning. The wind direction will shift to the South early Tuesday, then west during the midday hours.
  • Impacts: numerous downed trees, and widespread, potentially Long-duration power outages.

The National Weather Service continued to offer recommendations for how to deal with the storm.

A High Wind Warning means a hazardous high wind event is expected or occurring. Sustained wind speeds of at least 40 mph or gusts of 58 mph or more can lead to property damage. If you experience a power outage, do not use generators. Grills or other gasoline, propane or charcoal burning devices inside your home or garage. They produce carbon monoxide, an odorless, colorless gas that kills more than five hundred Americans each year. Generators should be placed outside, away from doors windows and vents that could allow carbon monoxide to seep inside. Do not let your car idle inside the garage, even if the garage door is open.

Please be aware of these risks and alter your preparations as needed. If you need to reach Gunn Mowery, please contact us at toll-free at 1-800-840-1243, or locally at any of the numbers below. For claims information, please visit our claims page here. You can also e-mail us at

  • Harrisburg, 717-657-3233
  • Lemoyne, 717-761-4600
  • New Cumberland, 717-774-7481
  • Dillsburg, 717-432-9635
  • Hanover, 717-637-2221
  • Mechanicsburg, 717-766-0241
  • Mount Joy, 717-653-1481
  • Lancaster, 753-5000
  • State College, 814-237-2491

Here are some common tips that can help you prepare for a Hurricane:

Plan ahead and practice so that your evacuation is safe, smooth and fast. In an emergency you may have only a few minutes to gather your important papers and leave your home, possibly for good. Have the following ready to go:

  • Medicines, prescriptions, comfort items and a change of clothes.
  • Emergency supplies such as flashlights, radio, batteries and water.
  • Computer hard drive or laptop.
  • Photographs.
  • Insurance policies; birth and marriage certificates; wills; deeds; financial information such as account numbers, recent tax returns, stocks, bonds and other negotiable certificates; driver’s licenses and other personal identification.

Looking intimately at your home, there are some tips you can use to proof your home from potentially damaging winds, and or weather-related risks.

  • Install storm shutters to protect your windows or use plywood panels, which can be nailed to window
  • frames when a storm approaches.
  • Make sure exterior doors have at least three hinges and a dead bolt lock that is at least one-inch long. Sliding glass doors should be made of tempered glass and covered with shutters or plywood.
  • Replace old garage doors and tracks with a door that is approved for both wind pressure and impact protection. Wind coming into your home through an opening this large poses grave problems for the rest of your home—especially your roof.
  • Seal outside wall openings such as vents, outdoor electrical outlets, garden hose bibs and locations where cables or pipes go through the wall to prevent water penetration by using a high quality urethane-based caulk.
  • Prepare your yard by removing all outdoor furniture, lawn items, planters and other materials that could be picked up by high winds. Trim trees and shrubbery and remove weak branches on plants and trees.

For more news related to Hurricane Sandy, please see these links as reference links: