Home prices are not home values

The moves made by the Fed have poured icy water on the once scalding housing market, freezing prices or in some cases even lowering them.

So that means your home is insured for the right amount and you can stop worrying, right?

Sadly, no. Insurance deals with home value— otherwise known as reconstruction cost. And the cost to rebuild your home can differ greatly from what it would cost to purchase your home.

Here are some of the factors that determine reconstruction cost

• Age of Home - Older homes are made with older materials, and your insurance will try to match like-for-like.
• Price of Materials - The current cost of materials can make a big difference. Especially with inflation.
• Level of Upgrades - The overall style of a room influences the cost (shag carpet, anyone?). A never-upgraded kitchen in a 1970s ranch home will cost less to rebuild than a completely renovated modern kitchen.

Now you know what your home policy coverage really means. Also, remember to check your values when it is time for your annual review.