What is the difference between “replacement cost” and “market value”?

Replacement cost is the amount it costs to rebuild a structure.  This amount can also include demolition.  This value can be significantly different than an appraisal.  The reason is, that the cost of materials to rebuild can outweigh a structure’s market value.  When insuring a structure the insurance company needs to know the replacement cost.  There are tools that our agents use to help approximate this value.