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.

Implement Safety Rules for your Residential Pool

Many children drown or are injured in residential pools every year. By implementing a good set of safety rules, parents can help keep their kids and visitors safe. Some people may think it sounds rude to lay down a list of rules in front of pool guests, but the cost of a liability lawsuit would be much worse.

To avoid sounding like a stickler, simply explain to pool guests that their safety is important. Explain that they can help out by following the safety rules. Parents should review these rules with children frequently. Quiz them on each point to ensure they understand thoroughly. The following tips are helpful for developing a strong set of pool and spa safety rules.

1. Specify all requirements. This should be the most important step. Decide who can go in the pool and at what time. For example, children should have specific blocks of time when they are allowed in the pool, and they should not be allowed to go in when an adult is not present. Teach them it is dangerous to run.

Instead of just telling them not to run, explain how they can slip, fall into the pool and possibly drown. Discourage horseplay or rough water games. Children who cannot get along in the pool should understand that there will be consequences. Kids should also understand how important it is to stay away from drains and filters.

2. Have an emergency plan. Even if strict rules are set in place, pool accidents may still happen. It is important to know what to do. Make sure a cordless phone is always near the pool. If an accident happens, it will be easier for someone to call 911. Adults should learn how to perform CPR. The Red Cross offers low-cost classes, and some hospitals or health clinics offer free classes. Make sure kids know how to dial 911, and they should know what address to tell emergency response teams to locate.

3. Teach kids how to swim. Although toddlers may not be up for actual swimming lessons, it is good to put them in the water with floating pool toys. Do not leave them alone, but let them get accustomed to the water. When children are old enough for swimming lessons, enroll them in beginner courses. Let them continue until they complete all of the courses. Adults who have never taken swimming lessons should also learn how to swim. As a backup, it is helpful to have a life-saving floating raft attached to a rope or pole.

4. Keep the pool area safe. When the pool is not in use, make sure it is covered. Purchase a pool cover manufactured by professionals. Never use a tarp. Some nets work well as pool covers, but they become weathered over time, so be sure to replace them every few years. Nets may also be easy for some children to remove. The optimal choice is a durable hard cover with a locking mechanism. Make sure there is a fence around the pool or yard.

5. The fence should stand at least four feet high. If a house is used as a fourth side to enclose a pool, install door alarms. This will alert parents when kids enter the pool area. It is also helpful to install underwater alarms or surface wave alarms. If parents do not deactivate these alarms, they will go off when kids enter the pool.

Accidents can happen in a second, and drowning can happen in less than a minute. Check drain covers frequently, and make sure they are compliant with current regulations. A pool service company will be able to provide information about current drain cover specifications. Remember to keep any gates to the pool area locked. Homeowners may be liable for uninvited people who wander into an unlocked pool area and get injured.

For more information on how to best cover your pool from liability, please give Gunn Mowery a call at 800-840-1243, or e-mail us at Become our Facebook fan at

Fire Safety Facts

Fire is a devastating loss for any homeowner. Please keep the following in mind to keep your home safe.

  • Install smoke alarms on all levels of your home and change batteries at least once a year.
  • Use candles with caution; keep them away from flammable materials. Always extinguish them when leaving the room.
  • Clean your dryer lint screen regularly.
  • Never leave food on a stove unattended.
  • Never smoke in b ed or leave burning cigarettes or cigars unattended.
  • Keep matches and lighters out of the reach of children.
  • Never place portable space heaters near drapery or furniture.

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