If you were asked to describe the state of the housing market over the past few years, it could be summarized in one word: unpredictable.

At the start of the COVID-19 pandemic, many experts predicted a looming housing crash. But instead of heading into a real estate meltdown, U.S. home prices increased an astounding 37 percent in the two years between March 2020 and March 2022.

In fact, a recent study from Moody’s Analytics found home prices are currently “overvalued” by nearly 25 percent. With this massive fluctuation in real estate values, you may be wondering if your homeowners insurance is still providing the right level of protection.

The answer, of course, will depend on your specific homeowners policy. But there’s one factor that can make a big difference in the event of a major claim — whether your home is insured using market value or replacement cost.

What is Market Value?

The market value of your home is based on what your house and land would sell for on the real estate market. It’s essentially an appraisal of how much your home would be worth if you had to buy it from a realtor today.

A home’s market value is based, in part, on the size and condition of the house. But it’s also influenced by a number of other factors — including your neighborhood, school district and the overall real estate market in your area.

What is Replacement Cost?

A homeowners policy based on replacement cost means your home is insured using an estimate of what it would cost to repair or rebuild your home with materials of like kind and quality in the event of a total loss. Unlike your home’s market value, the replacement cost will not vary because of where you live or what similar homes are selling for. Instead, replacement cost is calculated on factors like the cost of building materials and construction contractors.

What’s the Difference Between Market Value and Replacement Cost?

Here’s an example to help you understand how these two types of coverages would play out in the event of a claim.

Let’s say your home has a market value of $250,000. But at the current rates of construction and materials, it would cost $300,000 to rebuild it in the event of a total loss — like a fire or natural disaster.

If your home was insured using its market value, you’d be left with a $50,000 coverage gap. In this case, your options would be to build a smaller, less expensive home, or pay out-of-pocket for the difference.

What is Guaranteed Replacement Cost?

Whether the value of your homeowners policy is calculated using market value or replacement cost, the amount your home is insured for will be listed as the limit on your policy.

But sometimes, even the best estimates can come up short (like when lumber prices unexpectedly spiked in 2021). That’s why ERIE offers Guaranteed Replacement Cost¹ coverage. If your homeowners policy includes Guaranteed Replacement Cost, ERIE will pay to rebuild your home with materials of like kind and quality without limiting it to the amount of coverage listed on the policy. That means if it’s a covered loss and costs run high, ERIE will pay whatever the difference is.

It’s also worth noting that this coverage requires any home improvement over $5,000 to be reported to your agent within 90 days. So be sure to tell your agent about any recent home improvement projects.

Get the Protection You Deserve

With Guaranteed Replacement Cost from ERIE, you can rest easy knowing your coverage will go the distance. Because unlike other types of homeowners policies that subtract for wear and tear or depreciation, ERIE pays the full cost of rebuilding your home back to its former glory.

It’s impossible to prevent every accident or disaster, but there are some simple steps you can take that will go a long way to protecting your biggest investment.

1. Know your shut-off valves. Few people know where the emergency shut-off valves are located for gas, water and electricity. Take a moment and find them, and make sure everyone in your house knows where to find them. Pro tip: give the water valve a practice twist, as these shut-offs can get jammed from years of not being used.
2. Check your washer and dryer. Worn out rubber hoses in your washing machine can burst, spilling hundreds or even thousands of gallons of water on the floor. If your rubber hoses are more than just a few years old, swap them out for steel-belted hoses (and read this to find other ways to prevent home water damage.) When it comes to your dryer, lint can build up over time in the dryer vent and spark a fire. Luckily, a quick trip to the hardware store and some extra spring cleaning can reduce your risk of these common causes of fire and water damage.
3. Plan ahead and find a friend. If you can’t afford a monitored security system, the next best thing is to give the appearance that someone’s home while you’re away. Install lamp timers, keep a radio turned on and tuned to a talk station, and when you’re on vacation, have a friend shovel your walkway or park their car in your driveway. Above all, keep lower-level windows and garage doors closed and all entrances locked.
4. Smoke detection protection. Every home should have at least one smoke detector on each floor and test the batteries twice a year. Make it easy and do it right before you adjust your clocks in the fall and spring. Smoke detectors last about 10 years. Each time you get a new one, use a permanent marker to write the month and year on the back. (And don’t forget to test your house yearly for other gases like radon.)
5. Prepare for severe weather.  Whether your part of the country is prone to flooding, hurricanes or other natural disasters, take a look around and consider upgrades and simple maintenance to help minimize damage from wind and water. In tornado-prone areas, a safe room is always a smart addition to protect you and your family from the storm. And if a renovation isn’t in your budget, consider creating a home emergency kit to keep your family safe or keeping a supply of water on hand.

Your house is most likely one of the biggest investments you’ll ever make.

Do you have the right tools to help you manage it? And no, we aren’t talking about the ones in your toolbox (although those are definitely important).

We’re talking about apps specifically designed to help you easily manage the many aspects of owning and operating your home. From landscape design to planning your next remodel to making sure you have the right part to fix that broken appliance, there are a wealth of apps available for download that can help make homeownership a little easier.

Let’s take a look at some apps made just for homeowners that can help you keep up on those things that make your house a home.

Useful Apps for Homeowners

• Centriq. That stack of appliance manuals is a thing of the past. The Centriq app features a seemingly endless catalog of operating manuals for nearly any kind of appliance or piece of home equipment ‒ from blenders to water heaters to drills and so much more. Not only will you have all of your manuals at your fingertips, the app also features how-to videos, maintenance reminders and safety recalls. It even makes it easy for you to purchase replacement parts. While there are several plans to choose from, including a free basic level, be prepared to spend a little if you want to take advantage of all of Centriq’s features.

  When a maintenance reminder goes off, make sure you complete it. See how survey takers weighed in on whether they fixed it or risked it. 
  

• HomeZada. Do you have a true handle on the financial aspects of running your home? Do you know where to start with your next remodeling project? Do you know when you’re supposed to have your gutters cleaned out? You will with HomeZada. This app touts itself as a home management solution that tracks everything from home improvement projects to maintenance schedules to financial data on things like expenses, maintenance costs and home values. Ultimately, it aims to help you gain more control over the operations of your abode. There are several subscription options to choose from, with a very basic free version.

  Speaking of home improvements, here are five projects you can complete to make your home safer.

• National Association of Insurance Commissioners (NAIC) Home Inventory App. A home inventory is exactly what it sounds like. It’s a list of all your personal possessions, along with their estimated value. And we can’t stress enough how important it is to have a home inventory, because it’s a great way to help protect the contents of your home. The free NAIC Home Inventory App lets you create a home inventory from the convenience of your smartphone. You can manually enter items or scan barcodes and upload photos, organizing your belongings by room. And if you ever need to file a claim, you can export your inventory for easy delivery to your insurance company.

• Erie Insurance mobile app. Gain easy, on-demand access to your ERIE homeowners insurance policy with our mobile app. You can securely access important policy information, make a payment, view claim status and more. Gain peace of mind that your home is protected ‒ all from the palm of your hand. Note: you must have an ERIE online account.

• Security systems. There are a lot of ways to keep your home secure. Having a security system ‒ or security equipment ‒ is one of them. And thanks to smart technology, you can almost guarantee that there’s an app for many security solutions on the market ‒ such as ADT Pulse, Ring, SimpliSafe and more. Check with your provider to see what apps are available for your security system. Many have features that allow you to set your alarm remotely, dim your lights and even connect your smart devices.
• Smart Home apps. Thanks to the internet of things, it’s possible for nearly every appliance in your home to also serve as a smart device. From thermostats and light bulbs to refrigerators and coffee pots, technology now makes it possible to control your home while you’re away and automate a variety of household tasks. But with so many different components, managing them all can be a chore. That’s why the “big three” tech companies have all focused on their own smart home apps: Amazon Alexa, Google Home and Apple Home. If you already own a few smart devices, you’re probably familiar with these apps. But it’s worth doing a little research to understand all their available features and capabilities.

Keeping You in the Moment

Home is not just a place; it’s a feeling, too. We get how important “home” is and we’re here to protect it. With the help of an ERIE agent, you can be confident in your coverage.

It’s impossible to prevent every accident or disaster, but there are some simple steps you can take that will go a long way to protecting your biggest investment.

1. Know your shut-off valves. Few people know where the emergency shut-off valves are located for gas, water and electricity. Take a moment and find them, and make sure everyone in your house knows where to find them. Pro tip: give the water valve a practice twist, as these shut-offs can get jammed from years of not being used.
2. Check your washer and dryer. Worn out rubber hoses in your washing machine can burst, spilling hundreds or even thousands of gallons of water on the floor. If your rubber hoses are more than just a few years old, swap them out for steel-belted hoses (and read this to find other ways to prevent home water damage.) When it comes to your dryer, lint can build up over time in the dryer vent and spark a fire. Luckily, a quick trip to the hardware store and some extra spring cleaning can reduce your risk of these common causes of fire and water damage.
3. Plan ahead and find a friend. If you can’t afford a monitored security system, the next best thing is to give the appearance that someone’s home while you’re away. Install lamp timers, keep a radio turned on and tuned to a talk station, and when you’re on vacation, have a friend shovel your walkway or park their car in your driveway. Above all, keep lower-level windows and garage doors closed and all entrances locked.
4. Smoke detection protection. Every home should have at least one smoke detector on each floor and test the batteries twice a year. Make it easy and do it right before you adjust your clocks in the fall and spring. Smoke detectors last about 10 years. Each time you get a new one, use a permanent marker to write the month and year on the back. (And don’t forget to test your house yearly for other gases like radon.)
5. Prepare for severe weather.  Whether your part of the country is prone to flooding, hurricanes or other natural disasters, take a look around and consider upgrades and simple maintenance to help minimize damage from wind and water. In tornado-prone areas, a safe room is always a smart addition to protect you and your family from the storm. And if a renovation isn’t in your budget, consider creating a home emergency kit to keep your family safe or keeping a supply of water on hand.