With the housing market being what it is, people think that the coverage on their homes should reflect the market value -- but you couldn’t be more wrong. The difference between market value and replacement cost is that market value reflects what a home can be sold for but replacement cost is what a home can be re-built for. Do you see the difference?
The reason behind this is in the numbers. Because you have only insured your home for 80% of its value, you will only receive payment for 80% of the loss. If you have questions about replacement cost, contact your insurance agent.