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The Purpose of a Replacement Cost Estimator

written by: Cameron Easey•edited by: Donna Cosmato•updated: 7/6/2011

Insurers use various means to calculate the replacement cost of a dwelling to determine the how much it will cost to completely replace a dwelling. One tool they have at their disposal is the use of a replacement cost estimator. A replacement cost estimator is also known as a repair cost estimator.

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    Overview

    There are many factors that are used to calculate a dwelling's replacement cost including design features as well as building materials. One of most well known organizations that produces a replacement cost estimator is Marshall & Swift. The replacement cost of a home is one factor that is used to determine the premium to pay for a homeowners insurance policy. A replacement cost estimator can generally provide a detailed estimate as well as a basic estimate depending on what is needed for a quote or policy.

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    Uses

    A replacement cost estimator has other uses besides being a tool used by insurance companies to calculate the replacement cost of a home for an insurance policy. Builders can use a replacement cost estimator to determine the cost to finish a project. Contractors can see the total cost for a building based on different types of building materials. Building materials can generally consist of replica materials as well as current or modern materials.

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    Calculation

    A replacement cost estimator uses many different factors to determine the final amount. Factors that are used include style of home, the total area or square footage as well as the foundation type. There may be an additional section if a home has a basement, if it is a walk-out and if it is finished. A replacement cost estimator will also ask what type of materials are used in the exterior walls, the floor finishes and the percentage of each type of material. There will also be questions about the type of roof, if a deck is attached as well as the number of kitchens and bathrooms. Other details may also be asked about additional features such as doors, windows and any fireplaces.

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    Benefits

    The use of a replacement cost estimator is a great way to determine the actual cost to replace a home with different types of materials. Replacement cost estimators are available to use online by builders and contractors as well as individuals. Insurers that provide homeowners insurance will usually use sophisticated computer programs based on data provided by Marshall & Swift or other organizations to determine the replacement cost of a home.