Today's homes are insured for what is termed "Replacement Cost", which basically means that they are covered for what it would cost to rebuild in today's market. It helps to cover some of the hidden costs in the event of a loss. For instance, your home burns down, the cost of removing and disposal of debris from the home is taken out of the dwelling amount, or Coverage A. So if your home is insured for $100,000, and it takes $5,000 to remove all the debris left behind, you are going to be shorted $5,000.00 if your house isn't insured to full replacement cost!