First off, this is not an isolated issue only facing Georgia homeowners. The issue is nationwide. Our insurance company is based in Georgia but we write policies with clients all across the nation who have this same homeowners insurance question.

The logic exists that if the market value of your home has decreased, you could expect the cost to insure the depreciating value to proportionately decrease as well. The argument seems to be logical, but sadly isn’t true.

The truth about homeowners insurance costs compared to your home’s market value

In the end the final word comes down to construction costs. Homeowners insurance covers a home’s replacement cost. Meaning, the costs of insuring a home is set on the amount it costs to rebuild your home in the same location, same size, and same quality of construction determined by building costs and construction costs of today’s market.

The insurance company is paying to rebuild a new home, not purchase your neighbors house of similar worth.

Sometimes the opposite can be true

When you acquire a home, you purchase the land and the structure on the land. Depending on the location of your home and amount of land you own the opposite may exist and your insurance costs may be less than your home market value. If you are to experience a fire or some other type of loss, you still own the land and won’t need to “replace it.” In this case the insurance value would actually be less than the market value.

This scenario is less likely today due to the hurting housing market and current expenses of construction costs. Reconstruction costs are on the rise just as market value has been declining.


The insured cost covers the price to repair and construct your home and due to the rise in construction costs against the decline of the housing market in many cases your homeowners insurance may be more expensive than the current market value.

There are some things our Insurance company believes you should consider before buying home insurance.

We want to do our best to help you succeed. Let our Georgia insurance agency know if you have further questions we could answer or can give you insurance advice.