If you lost your home in a fire, how much would it cost to rebuild it? The answer may be different than you think. And if your home isn’t insured to its full replacement cost, your homeowner's policy may not cover the full cost for you to rebuild it in the event of a covered loss.

Rebuilding costs could differ from what you paid for your home and be more than its current market value – what it would sell for today – especially in areas where the value of real estate has changed. A replacement estimate includes costs to rebuild your home component by component. Current costs for labour, materials and contractor fees may influence the replacement cost of your house.

Some key factors that affect the cost of rebuilding a home:

• Total living area (square footage). 
• Style of home (e.g., ranch, contemporary, colonial).
• Construction type (e.g., frame or brick). 
• The number of kitchens and bathrooms. 
• Quality of custom materials. 
• Garage type (e.g., attached, detached, built-in). 
• Special features (e.g., fireplaces, porches, skylights). 
• Additions or enhancements (e.g., finished basements or in-law apartments).

It’s important to have a current estimate for your home’s replacement cost, one that reflects any significant improvements that you have made to the house. For example, if you installed a central air conditioner or finished your basement after you took out your insurance policy and never updated the replacement cost, your home might not be fully covered in the event that you need to completely rebuild following a covered loss.

Here are some steps that you can take:

• Talk to your agent or insurance representative about the dwelling coverage on your homeowner's insurance policy. 
• Talk to your agent or insurance representative who have tools to help estimate your home’s replacement cost.
• Check in on your home’s replacement cost yearly, especially after making improvements to your home. Remember, even small improvements can affect the cost to rebuild your home.

Making sure that your home is insured to its full estimated replacement cost is another way to help protect your home and the things you’ve worked hard to build.

Source: https://www.travelers.com/tools-resources/home/insuring/is-your-home-insured-to-its-replacement-value