--- title: Insurance relating to resale vs replacement value description: Updating your insurance policy regularly is a very important part of homeownership image: https://res.cloudinary.com/rawson/image/upload/v1/remote/blog/production/posts/2330/8s0nWYuEZrv4FPc3LeeezLQthy8gGvoxuQdyK7Jc.jpeg --- [![Rawson Property Group logo](https://blog.rawson.co.za/hs-fs/hubfs/Rawson%20-June2017/image/logo-rawson-property-group-white-112x26.png?width=113&height=26&name=logo-rawson-property-group-white-112x26.png "Rawson Property Group logo")](https://www.rawson.co.za/) [![Rawson Property Group logo](https://blog.rawson.co.za/hs-fs/hubfs/Rawson%20-June2017/image/blog-logo.png?width=113&height=26&name=blog-logo.png "Rawson Property Group logo")](https://www.rawson.co.za/) - Buy - [Residential](https://www.rawson.co.za/property/for-sale) - [Commercial](https://www.rawson.co.za/commercial-property/for-sale) - [Bank Mandated](https://www.rawson.co.za/property/for-sale?bank-mandated=1) - [Auctions](https://www.rawson.co.za/property/for-auction) - [New Developments](https://www.rawson.co.za/property/for-sale?new-development=1) - SELL - [Sell with Rawson](https://www.rawson.co.za/sell) - [Get a valuation](https://www.rawson.co.za/valuation) - [Auction with Rawson](https://www.rawson.co.za/auctions) - RENT - [Landlords](https://www.rawson.co.za/landlords) - [Rentals made easy](https://www.rawson.co.za/rentals) - [Residential](https://www.rawson.co.za/property/to-rent) - [Commercial](https://www.rawson.co.za/commercial-property/to-rent) - [Commercial](https://www.rawson.co.za/commercial) - FINANCE - [Rawson Finance](https://www.rawson.co.za/finance) - [Bond Repayment Calculator](https://www.rawson.co.za/bond-repayment-calculator) - [Transfer Cost Calculator](https://www.rawson.co.za/transfer-cost-calculator) - [BLOG](https://blog.rawson.co.za) - [CONTACT](https://www.rawson.co.za/contact) - Property - [Residential](https://www.rawson.co.za/property/for-sale) - [Commercial](https://www.rawson.co.za/commercial-property/for-sale) - [Bank Mandated](https://www.rawson.co.za/property/for-sale?bank-mandated=1) - [Auctions](https://www.rawson.co.za/property/for-auction) - [New Developments](https://www.rawson.co.za/property/for-sale?new-development=1) - Services - [Sell](https://www.rawson.co.za/sell) - [Rent](https://www.rawson.co.za/rentals) - [Commercial](https://www.rawson.co.za/commercial) - [Auction](https://www.rawson.co.za/auctions) - [Landlords](https://www.rawson.co.za/landlords) - Rawson - [Finance](https://www.rawson.co.za/finance) - [Become an agent](https://www.rawson.co.za/join-us/become-a-rawson-sales-partner) - [Become a franchisee](https://www.rawson.co.za/join-us/become-a-rawson-franchisee) - [Blog](https://blog.rawson.co.za) - [About us](https://www.rawson.co.za/about) - Contact - [Head office](https://www.rawson.co.za/contact#head-office) - [Agents](https://www.rawson.co.za/agents) - [Offices](https://www.rawson.co.za/offices) [More Menu ](https://blog.rawson.co.za/resale-vs-replacement-value-is-your-home-underinsured#footer) - [Blog](https://blog.rawson.co.za) - [Insurance relating to resale vs replacement value](https://blog.rawson.co.za/resale-vs-replacement-value-is-your-home-underinsured) # Insurance relating to resale vs replacement value [![Share on Facebook](https://cdn2.hubspot.net/hub/251674/hubfs/1px.png?width=24&name=1px.png)](http://www.facebook.com/share.php?u=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dfacebook) [![Share on LinkedIn](https://cdn2.hubspot.net/hub/251674/hubfs/1px.png?width=24&name=1px.png)](http://www.linkedin.com/shareArticle?mini=true&url=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dlinkedin) [![Share on Twitter](https://cdn2.hubspot.net/hub/251674/hubfs/1px.png?width=24&name=1px.png)](https://twitter.com/intent/tweet?original_referer=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&url=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&source=tweetbutton&text=Insurance%20relating%20to%20resale%20vs%20replacement%20value) [![Share on Pinterest](https://cdn2.hubspot.net/hub/251674/hubfs/1px.png?width=24&name=1px.png)](http://pinterest.com/pin/create/button/?url=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dpinterest&media=http%3A%2F%2Fcdn1.hubspot.com%2Fhub%2F158015%2F305390_10100548508246879_837195_59275782_6882128_n.jpg) Updating your insurance policy regularly is a very important part of homeownership, but it can be difficult to know for sure just how much coverage you really need. Many real estate agents offer free home valuations, which can be a useful tool in assessing how much insurance coverage you need, but beware: limiting coverage to resale value alone could leave you dangerously uninsured! “What people often don’t think about is the fact that when your house is damaged and you need to claim from insurance, that money isn’t used to buy an equivalent home – it’s used to fix or rebuild your damaged property,” says Schalk van der Merwe, franchisee at the Rawson Properties Helderberg group. “That means resale or market value is actually almost irrelevant when it comes to insurance. Rather, you need to make sure you’re covered for the amount you would need to rebuild your home from scratch.” This, van der Merwe reveals, can be a far more expensive prospect. “Building a home on an empty stand can cost anywhere from 10% to 30% more than buying an existing property,” he says, “and that’s excluding any costs involved in clearing rubble or removing unsafe structures. In the case of rebuilding a damaged home, this is almost always a factor, and can add significantly to the cost of repair or replacement.” According to van der Merwe, this has been a hard lesson learned by several families in the Western Cape which was affected by severe floods in 2013 and a number of widespread fires in more recent months. To avoid the heart-breaking situation of being left underinsured in a worst-case scenario, he recommends reviewing home insurance policies on a regular basis, with the help of a qualified and informed real estate agent. “A good property valuation – or property value estimation – should cover a lot more than just market value,” he says. “There are actually four different facets to the value of any property – market, replacement, municipal and indexed value – and a good estate agent should be able to give you information on all of them.” When it comes to insurance, however, replacement value is the most important figure. This is based on the construction costs involved in returning a destroyed property to its previous condition, and should not include the value of the vacant land. “Homeowners also need to be careful of the wording of their policies with regards to replacement value versus actual cash value,” warns van der Merwe. “If they are insured for actual cash value, the insurance company will deduct an amount for depreciation from the cost of replacement and the homeowner will be left footing the bill for the difference. If they are insured for replacement value, however – and their replacement valuation was accurate – they will be reimbursed in full for the repair or rebuilding of their home.” So what’s the best way to get an accurate replacement value estimate? Van der Merwe believes the key lies in getting an experienced real estate agent with up to date knowledge of your area to analyse your home. “All real estate agents will be able to give you some idea of the market value of your home, but it takes a lot more specialist knowledge to be able to provide an estimate on construction costs as well,” he says. “At Rawson, we have years of experience, and access to a huge amount of data that plays into all aspects of a property’s value. That allows us to give far more accurate estimates on valuations for all purposes, including insurance.” To book a complementary property value estimation in the Helderberg region, contact Schalk van der Merwe at Rawson Properties Helderberg on 082 880 7071. For value estimations in other areas, get in touch with your nearest Rawson Property Group franchise - 021 658 7100. ##### For more information, email [marketing@rawsonproperties.com](mailto:marketing@rawsonproperties.com) or visit [www.rawson.co.za](https://www.rawson.co.za/) for the latest market tips and industry news. ## Rawson ### Leave a comment ### More Posts Jul 09, 2026 #### [Managed vs Unmanaged Leases: Choosing the Right Structure for Your Rental Investment](https://blog.rawson.co.za/managed-vs-unmanaged-leases-choosing-the-right-structure-for-your-rental-investment) rental-advice [![Share on Facebook](https://blog.rawson.co.za/hs-fs/hubfs/social-uploaded-images/Facebook%20Icons.png?width=24&name=Facebook%20Icons.png)](http://www.facebook.com/share.php?u=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dfacebook) [![Share on LinkedIn](https://blog.rawson.co.za/hs-fs/hubfs/social-uploaded-images/Linkedin%20Icon.png?width=24&name=Linkedin%20Icon.png)](http://www.linkedin.com/shareArticle?mini=true&url=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dlinkedin) [![Share on Twitter](https://blog.rawson.co.za/hs-fs/hubfs/social-uploaded-images/Twitter.png?width=24&name=Twitter.png)](https://twitter.com/intent/tweet?original_referer=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&url=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&source=tweetbutton&text=Insurance%20relating%20to%20resale%20vs%20replacement%20value) Jul 02, 2026 #### [Stock shortage puts Western Cape sellers in the driving seat](https://blog.rawson.co.za/stock-shortage-puts-western-cape-sellers-in-the-driving-seat) advice [![Share on Facebook](https://blog.rawson.co.za/hs-fs/hubfs/social-uploaded-images/Facebook%20Icons.png?width=24&name=Facebook%20Icons.png)](http://www.facebook.com/share.php?u=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dfacebook) [![Share on LinkedIn](https://blog.rawson.co.za/hs-fs/hubfs/social-uploaded-images/Linkedin%20Icon.png?width=24&name=Linkedin%20Icon.png)](http://www.linkedin.com/shareArticle?mini=true&url=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dlinkedin) [![Share on Twitter](https://blog.rawson.co.za/hs-fs/hubfs/social-uploaded-images/Twitter.png?width=24&name=Twitter.png)](https://twitter.com/intent/tweet?original_referer=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&url=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&source=tweetbutton&text=Insurance%20relating%20to%20resale%20vs%20replacement%20value) May 28, 2026 #### [Rates increase by 25 basis points: What May’s MPC decision means for SA property](https://blog.rawson.co.za/rates-increase-by-25-basis-points-what-mays-mpc-decision-means-for-sa-property) [![Share on Facebook](https://blog.rawson.co.za/hs-fs/hubfs/social-uploaded-images/Facebook%20Icons.png?width=24&name=Facebook%20Icons.png)](http://www.facebook.com/share.php?u=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dfacebook) [![Share on LinkedIn](https://blog.rawson.co.za/hs-fs/hubfs/social-uploaded-images/Linkedin%20Icon.png?width=24&name=Linkedin%20Icon.png)](http://www.linkedin.com/shareArticle?mini=true&url=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dlinkedin) [![Share on Twitter](https://blog.rawson.co.za/hs-fs/hubfs/social-uploaded-images/Twitter.png?width=24&name=Twitter.png)](https://twitter.com/intent/tweet?original_referer=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&url=https%3A%2F%2Fblog.rawson.co.za%2Fresale-vs-replacement-value-is-your-home-underinsured%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&source=tweetbutton&text=Insurance%20relating%20to%20resale%20vs%20replacement%20value) [![Rawson Property Group logo](https://blog.rawson.co.za/hs-fs/hubfs/Rawson%20-June2017/image/logo-rawson-property-group-white-112x26.png?width=113&height=26&name=logo-rawson-property-group-white-112x26.png "Rawson Property Group logo")](https://www.rawson.co.za/) Property - 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