Pays the full cost of replacing or repairing a damaged or destroyed home, even when that amount extends above policy limits.
Designed to protect policyholders after a major disaster, when reconstruction expense runs high and homeowners are financially vulnerable, guaranteed, or extended replacement cost policies cost more than a standard homeowners policy. However, they usually cover at least 120 percent of the home’s original value-and; in some cases, no percentage limits are imposed. This allows the insured to return home after restoring the abode to pre-damage condition or better.
For homeowners who want to protect what they have without financial worry following a disaster, guaranteed or extended replacement cost coverage may prove valuable coverage worth the extra money paid in premiums.