Question

"The Brown family just bought a home for $300,000. Of that amount, the land is valued at $50,000. How much would the Browns have to carry in fire insurance in order to collect the full amount from a fire that caused $50,000 in damages?

Answer 1

For calculating the replacement value of the house the insurance company keeps in mind few things like the location of the house, year of construction, the up-gradation and the type of gradation.

Explanation:

These are some of the factors insurance companies take into account when calculating the replacement value of a home:

Location of the home, Year of construction,  Year of last major upgrades, Types of upgrades, Total square footage of the home, Foundation and building materials for the home.

The 80% rule refers to the fact that most insurance companies will not fully cover the cost of damage to a house due to the occurrence of an insured event (e.g., fire or flood) unless the homeowner has purchased insurance coverage equal to at least 80% of the house's total replacement value.