Is your client's home insured for what it actually costs to rebuild?
Market value and rebuild cost are two very different numbers, and most homeowners only know one of them. Use this tool to get a rebuild estimate based on real construction cost drivers: local labor, materials, quality, and location. Then enter the current dwelling limit below to see the gap, and whether it would fall on your client's portfolio to cover it.
Market value (Zillow) vs. rebuild cost — why they're not the same
Market value is what a buyer would pay for the home and land today. Rebuild cost is what it would cost to reconstruct only the structure if it were severely damaged or destroyed. Land isn't rebuilt, it's still there.
Land value can represent 20–50% of total market value in high-demand areas. A $1.2M home might cost only $600k to rebuild.
In rural markets, rebuild cost can exceed market value. Contractor scarcity and delivery costs don't fall with property prices.
Rebuild cost is driven by local labor rates, lumber, architectural complexity, and quality, not comparable sales.
Most insurers set dwelling limits at policy inception using simplified models. Those limits rarely keep pace with construction inflation, which ran 30–40% between 2019 and 2024.
Enter a valid 5-digit ZIP
Estimated rebuilding cost
National base rate
State cost factor
Location adjustment
Quality tier
Quality floor enforced
Square footage
Effective cost per sq ft
Based on a $200/sq ft national base rate with state, metro, and rural adjustments. Custom quality floors at $350/sq ft; premium at $500/sq ft. Covers structural rebuild only. Contents, landscaping, and additional living expenses are separate. Confirm with a licensed contractor or industry-grade replacement cost tool.
Rebuild cost by quality tier
Rebuild cost vs. square footage
4002,5005,0007,50010,000 sq ft
Coverage gap analysis
When a client is underinsured, the shortfall doesn't go away. It moves to your portfolio.
Enter their current homeowners dwelling limit below to see how much their coverage falls short of the estimated rebuild cost, and what that gap means for the assets you manage.
$
This is the "Coverage A — Dwelling" amount on your client's declarations page. It's the maximum the policy pays to rebuild the structure after a covered loss.
Coverage gap analysis
Current limit
homeowners policy
Estimated rebuild
full reconstruction
Shortfall
Coverage gap, current limit vs. rebuild estimate
Where coverage runs out
4002,5005,0007,50010,000 sq ft
Impact to AUM
The gap doesn't disappear. It becomes your client's problem, and your portfolio's.
Insurance runs out and the bill still arrives. Your client has four options to cover the difference, and each one draws from assets you manage. Here's what each actually costs when taxes, penalties, and lost growth are factored in.
Highest cost
401(k) distribution
Taxed as ordinary income plus 10% penalty. The gross pull can be 40–50% above the actual gap.
Moderate risk
401(k) loan
IRS-capped at $50k. A job change converts it to a taxable distribution immediately.
Lower cost
HELOC on home equity
No taxes, but puts the home back at risk. Variable rate over 10 years trades one exposure for another.
Most flexible
Taxable account sale
LTCG rates are lower than ordinary income, but low cost-basis positions amplify the tax drag.
The full analysis models each option with the real numbers, taxes, penalties, and opportunity cost, for your client's specific situation.
Also worth reviewing — clients with rental properties face this risk multiplied
Everything modeled here applies equally to investment and rental properties. For clients with multiple rentals, the AUM exposure compounds quickly.
Rental properties are often insured once and forgotten. Limits set at acquisition rarely reflect current rebuild costs after years of construction inflation.
A client with four rentals each underinsured by $100,000 carries $400,000 in silent balance sheet exposure, each of which could draw on managed assets to cover.
A major loss also eliminates rental income during reconstruction, compounding the financial impact beyond the build cost shortfall alone.
The same rebuild cost modeling available here applies to landlord policies in-app, giving you a consistent framework across a client's entire real estate footprint.
Advisor access · Step 2 of 2
Unlock the full Impact to AUM analysis
The next step models the real out-of-pocket cost of covering this coverage gap from each asset source: 401(k) distribution, 401(k) loan, HELOC, and taxable account sale, with taxes, penalties, and lost growth factored in. Enter your details to continue.
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