We do not take into consideration the value of the land.
The replacement cost is what the price would be to the clear structural debris, clean and prepare the site and reconstruct the building or home as it currently is. By knowing this, the client will have the correct amount that it should be insured for. Most people do not know that it is the responsibility of the insured to provide the insurance company with the correct amount that the property should be insured for. When you sign the insurance application, you are guarenteeing the insurance company that you have determined the full replacement cost of the building and are insuring it for that amount.