Art Polan, a seasoned insurance agent with three decades of experience, explains that homeowners’ insurance is determined by the replacement cost of a dwelling rather than its market value. Using an example, he illustrates that a house measuring 1,800 square feet with a replacement cost of $200 per square foot would require $360,000 in insurance coverage. This distinction is crucial for homeowners to understand when estimating their insurance needs. Polan emphasizes that the amount of insurance should reflect the cost to rebuild the home, not the price it might fetch on the market.
