Understanding your home’s replacement cost coverage- listed as coverage A- Dwelling on your home owners policy:
1.) Replacement Cost- Pays up to the coverage A limit and not a penny more.
2.) Extended Replacement Cost- Pays up the coverage A limit and an additional percentage-typically 10-25%. (This is typically what is offered by the “Big” name comanies)
3.) Guaranteed Replacement Cost- Pays an unlimited amount of money to rebuild your home. This is the best coverage you can get but you can’t get it from the State Farms, Allstates, etc because they don’t offer it.
After the San Diego wildfires of 2007 the estimates are that 3/4 homeowners did not get enought money from their insurance company to rebuild their homes. I have heard similiar stories from customers with relatives/friends whose homes we damaged by the storms in Missouri earlier this year. When you have a large catastrophe the costs to rebuild go sky high- that’s why it’s important to get Guarnteed Replacement Cost if possible.
Ask your agent: If my house were to burn to the ground today will my policy pay me a fixed amount of money to rebuild or an unlimited amount?