The Short Answer
The short answer is that the price of your home on the real estate market and the cost to rebuild it are not related. Consider the variances when looking at purchasing a 2750 sq/ft house in Courtice vs Etobicoke. While the market value tends to run higher in Etobicoke when compared to Courtice, the cost to rebuild the same 2750 sq/ft home in either location would be relatively equal.
The Longer Answer
Market value has no bearing on your home insurance. It is simply the price someone is willing to pay for your property. When trying to arrive at an insurable value for your home, insurance brokers are equipped with evaluation tools which calculate the cost to rebuild your home with like kind and quality, taking into consideration inflationary rates of construction materials and labour.
Here is a brief list of some of the factors that are considered when calculating the rebuilding cost of your home:
- Material costs to rebuild today
- Labour costs to rebuild today
- Demolition and debris removal – the cost of removing damaged and undamaged portions of the home and the cost to remove debris from the property.