Homeowners often assume that if their home is destroyed, their policy will cover the entire cost to rebuild. However, there are subtle differences between replacement cost coverages:
Extended Replacement Cost
- This provides an additional percentage (typically 10-25%) over your dwelling coverage limit to account for unforeseen increases in construction costs or materials.
- Helpful in cases where there’s a sudden rise in material costs after a major disaster in your area.
Guaranteed Replacement Cost
- Covers the full cost to rebuild your home, regardless of the policy limit.
- While more expensive, this coverage offers peace of mind, as it guarantees full rebuilding coverage even if the cost far exceeds initial estimates.
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