If you're purchasing a newly constructed house and you know how much the actual building materials and labour cost is, it may be a surprise to learn that the replacement cost could be higher than the original building cost. This can happen with your replacement value limits for two reasons: the cost of building materials can fluctuate yearly, which could be enough to make a significant difference. Two, home builders can take advantage of volume discounts for common materials, and the replacement contractors may not have access to the same deep discounts offered to major building companies.