Most interesting and no, was not trying to demean anyone here. In fact, I'm most curious about that report you have. If you can click the link to my website, click on the contact form, and send me an e-mail, I'll repy back so I can get that screen grab. Most apprecaited.
The only thing I disagree with you on is where you referred to local builders using "inflated" values. This subject can get quite deep depending on what we're talking about.
For example, if we're talking "standard" types of homes (cookie cutter homes like ranches, colonials, etc...and with no customizations), we here on Long Island definitely use a standard $180 per square foot as the base factor. However, if we're talking about "custom" homes, that changes everything, as we now start looking past claim amounts given a particular ZIP code.
In fact, I can even e-mail you a replacement cost estimator from one of my carriers. It lists reconstruction costs based on ZIP codes using prior claim data...real world costs based on actual losses. You may find this interesting as values for most states & local zip codes are included within.
Here is a link to the definition of "Real Estate Appraisal" as per Wikipedia:
As you can see, an appraiser determines the MARKET VALUE of a home. Market value includes the land the home sits on (lot size), as well as the area the home is located in with respect to resale value...values that can go up or down depending on the economy and/or the housing market.
When determining replacement cost in homeowners insurance policy, the parcel a dwelling sits on does not matter, nor does it matter what area a dwelling is located in. A homeowners insurance policy cares about how much will it cost to replace a dwelling (and ONLY the dwelling) using like kind and quality materials.
Construction costs vary from zip code to zip code, as set by home builders...NOT real estate appraisers. Construction costs ALWAYS go up no matter what the economy is doing (labor costs, cost for materials, etc.) That's why HO policies have an inflation guard endorsement you can pay extra for...to account for a sudden spike in construction costs (which DOES frequently happen).
If you want an accurate idea of what the replacement cost of a home is, contact several home builders in your area for estimates...NOT a real estate appraiser. If you're looking to see what your home will sell for on the market, contact a real estate appraiser...NOT a home builder.
-ZIP code where the dwelling is located
-The insurance company that is rating the property
-How robust the policy is
For homes that have replacement cost values of $1 million or less, the policies that are written are more of a "cookie cutter" variety (e.g. standard HO3 forms). However, when you start getting into high valued homes ($1 million +), many of the standard companies will not write HO3's for insured's. When this happens, insured's will need to be placed with "premier" insurance companies (e.g. Chartis, Chubb, Fireman's Fund).
Since premier insurance carriers offer many more policy features than standard carriers, the cost of the premium is much higher. This is due to the fact that these policies are customized based on special features and risk factors related to the dwelling. In order to accommodate full replacement of these homes after a total loss, the cost per square foot is much higher for high valued homes. In some cases, by twice as much as compared to standard homes.
As previously suggested, check with a local insurance agent in your area to determine the replacement cost per square foot for your home. For even greater value for your premium dollars, seek out an insurance broker...especially if you're dealing with a high valued home. Remember, brokers have access to multiple carriers as opposed to agents, who only have access to one carrier.