15 Fascinating Things You Need to Know About Your Insurance

Your homeowners policy may not pay enough to rebuild your house

When it comes to replacing your house after a catastrophic event such as a fire or tornado, homeowners policies have two ways of deciding how much you are owed: They may use a replacement cost or a market value.

As its name suggests, the replacement cost is what you would need to rebuild your house with the same materials and features. The market value is how much it would be worth if you put it up for sale. Homeowners policies that pay out market value are generally cheaper, but you could find you can’t rebuild your house for the amount its worth on the open market.

This detail can be easy to miss when you’re buying insurance, so it might be wise to double-check your policy.