Basis of valuation of home building under a home insurance policy

You can insure your home building on Reinstatement Cost Basis or Agreed Value Basis. Under reinstatement cost basis, your building sum insured is equal to Carpet Area multiplied by Present Day Cost of Reconstruction based on your local area/municipality. In case of a claim, the insurer will pay you the cost of reconstructing/repairing your home building to a state similar to the condition before the accident

Under Agreed Value Basis, you can insure your home building on market value. A valuation report by a government approved valuer would be required in case of a claim. In case of a claim, the insurer will pay you the Sum Insured only if you choose not to or are unable to reconstruct/repair your home building