What does the reconstruction value index mean?

What is replacement cost?

The replacement cost is used to determine the amount for which you should insure your home. The replacement cost is the amount needed to rebuild your home in the same location and in the same manner. Many people have doubts when they see the replacement cost and wonder if they’re actually getting the right home insurance policy. This is because the reconstruction value is often lower than the price they paid for the home. The sales price, after all, also takes into account the location of the house and the land. Since the location and the land are not lost in a fire, you don’t need to insure them, and they aren’t included in the reconstruction value. As a result, the reconstruction value is often lower than the sales price.

In addition to the market value and replacement cost, there is also the WOZ value. This is largely related to the market value and also factors in the land and location. The WOZ value is therefore often higher than the replacement cost.

When do you use a replacement cost meter?

The replacement cost calculator is often used when taking out a new home insurance policy. To be eligible for coverage against underinsurance, you are often required to fill out the replacement cost calculator when you purchase the policy. The amount calculated by the replacement cost calculator determines the insured amount and, consequently, largely determines the cost of the home insurance policy.

Of course, there are other ways to determine the replacement value of your home. For example, based on a (more comprehensive) appraisal report. However, a standard appraisal report does not specify the replacement value.

What is underinsurance protection?

Based on the information you provided when you took out the policy, the insurer assumes that the replacement cost of your home is X euros. If, in the event of a claim, it turns out that this value is lower than the actual replacement cost of your home, you will be underinsured. In that case, you will only be reimbursed for a portion of the damage and will therefore not be able to have the house completely rebuilt as it was.
To prevent this, you can take out insurance with a guarantee against underinsurance.

How does the replacement cost meter work?

The replacement cost is determined based on factors such as the type of home (row house, single-family home, etc.), the home's floor area, and the quality of its finishes.

Can anyone use the reconstruction value meter?

Anyone can use the reconstruction value meter; however, it cannot be used for all types of homes. Examples include a national historic landmark or a unique canal-side home.

Is a reconstruction value assessment valid forever?

The insurer will often ask you to fill out the replacement cost form every 5 years to maintain your coverage against underinsurance. You will also be asked to do this if you move.

Is everything included in the reconstruction value index?

The foundation is not included. However, if the foundation is also damaged, a new foundation will need to be built when the home is rebuilt. This, of course, also costs money. With most home insurance policies, you can simply have the foundation included in your coverage for an additional premium.

Download the Reconstruction Value Meter

We have a reconstruction value calculator that you can download. View the reconstruction value calculator (PDF).

Commercial Property

Do you own a commercial property? If so, you can calculate its potential replacement value online.