How much insurance coverage do you need? For many of us, our home is the biggest investment we'll ever make. So figuring out how much insurance coverage you need is kind of a big deal. Here's some help. (Image: Words on screen: Your home is a BIG investment. Protect it!) State Farm provides customers with coverage for their homes on a replacement cost basis. To provide this coverage, we need to have an estimate of what it would cost if you ever need to rebuild or replace your home. This estimate will also help you make an informed decision about how much coverage you need. People sometimes base how much coverage they need off of the market value of their home. But market value is different than replacement cost. Let's look at the differences. There are lots of things that determine market value. Supply and demand are two major factors. Too few homes to meet buyer demand can drive market value up. Too many homes for sale can drive market value down. Since market value considers the amount a buyer would pay regardless of how much it would cost to rebuild the home, it is not the best predictor of coverage needs in the event of a loss. (Image: Words on screen: Replacement Cost. Materials + Labor. A Professional estimate. Professional contractor or replacement cost appraisal.) Now let's look at replacement cost. There's no way to know today exactly what materials and labor would cost in the future if you had to rebuild. But there are several ways you can estimate the replacement cost of your home. An estimate from a professional, like a contractor or replacement cost appraiser, specific to your home is a good option to help determine replacement cost. (Image: Words on screen: Industry estimating tool. 360 value. Respected online tool) Another option is using a respected online tool like 360Value, which takes information you provide online and gives you an estimated replacement cost based on a normal market conditions. We recommend that you purchase an amount of coverage at least equal to the estimated replacement cost. Determining your home's estimated replacement cost is important, because this will ultimately determine which policy options are available to you. The coverage choice is yours, but think about the added financial burden and stress of not having enough insurance to rebuild your home. (Image: Words on screen: Review your policy) Beyond your initial insurance purchase, it's also important to review your policy, just to make sure it still provides the type of coverages and the amounts you want. That's especially important if you make big updates to your home, like remodeling or room additions. (Image: Graphic depiction of house with rooms being added) If you need help with your homeowner's insurance, State Farm is just a call or click away. (Image: Graphic representation of a State Farm agency with “open” sign on the door) State Farm (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates) is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites hyperlinked from this page. State Farm has no discretion to alter, update, or control the content on the hyperlinked, third party site. Access to third party sites is at the user's own risk, is being provided for informational purposes only and is not a solicitation to buy or sell any of the products which may be referenced on such third party sites.