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.

Tips to help prepare your home for winter

As the first leaves hit the ground and those fall breezes turn from cool to cold, it’s time to prepare for the winter. Whether that means snowstorms and ice or just the heavy chills many experienced in last year’s milder season, experts advise preparing your home for whatever Old Man Winter has in store.

Here are 10 popular winterizing tips:

  • Check doors, windows and any exterior opportunities that could affect your home. Caulk cracks and replace cracked or broken glass and dried-out or missing weather-stripping and seals.
  • Inspect and clean gutters and downspouts.
  • Inspect, repair or replace flashing, roof shingles or tiles. If needed, add attic insulation to prevent ice dams along the edge of the roof, which can cause water damage to roofs and ceilings.
  • Get the fireplace and furnace ready. Buy or chop firewood and inspect damper and chimney. Have the furnace inspected, clean the ducts, stock up on filters, and inspect or replace the thermostat.
  • Inspect, update or install smoke and carbon monoxide detectors as well as fire extinguishers.
  • Protect pipes. Insulate exposed pipes, and drain and close off A/C pipes or exterior hose bibs. If you plan a vacation, be sure to leave heat set at least to 55 degrees.
  • Reverse ceiling fans. In the summer, ceiling fans force breezes downward. In winter, reversing the direction of air flow forces the warm air at ceiling height back down along the walls, from where it will rise again, keeping the overall room temperature at a more comfortable level with less need for heating.
  • Prepare landscaping and gardens. Trim dead tree limbs or any branches that are hanging so close to the house or electrical wires that they could cause damage when weighted by ice. Bring sensitive plants indoors or move to greenhouse. Seal or repair sidewalks, driveways, patios, and decks.
  • Service winter equipment. Is your snowblower ready for action? Do you have snow shovels and ice choppers and adequate bags of sand or ice melt or icy surfaces?
  • Assemble an emergency kit. Include first aid supplies, flashlights, candles, lanterns, extra batteries, nonperishable food, and bottled water.

And don’t forget this is a great time of year for a homeowners coverage review with Gunn Mowery, your Trusted Choice independent insurance agent. Should winter storms cause damage to your home, be certain your current protection is adequate.

For more information on how you can properly prepare your home for winter, please contact our personal lines department at Gunn Mowery at 1-800-840-1243, option 2, or email us at You can like us on Facebook 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, unless that information is subsequently confirmed in writing. 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. Gunn-Mowery provides attributed content for your continued awareness and convenience. Content that appears is not intended to substitute for binding insurance advice.

Tips for Avoiding Water Loss

Among homeowner’s worst nightmares is to return home after an hour, day or week away to a water claim.

Pipes break, washer hoses deteriorate, and roofs leak. Unfortunately, many times these periols occur when the home is empty. When the homeowner returns, there can be catasrophic damange.

If this happens to you, please keep the following safety precautions in mind:

  • Do not walk in any standing water, as it could be charged from an electrical outlet or appliance.
  • Look up before entering a room to make sure water is not coming from the ceiling. If the ceiling is wet, be aware for potential collapses.
  • Determine if the water could be coming from the back up of a sewer or drain. This water is considered grossly unsanitary and any contact can cause illness.
  • Find the source of the leak and safely shut it off as soon as possible to avoid further damage.

Finally, contact Gunn Mowery to report the claim. We will asist you in contacting the proper insurance carrier. For more information on homeowner’s coverage and policies, please contact Gunn Mowery at 1-800-840-1243, or e-mail us at Become our Facebook fan at