Guaranteed Replacement Cost or Extended Dwelling Coverage
Guaranteed Replacement Cost Coverage (or what some companies call Extended Dwelling Coverage) on your home is an option found in some homeowner’s insurance policies. The policy pays the full cost of replacing the home even if this amount exceeds the policy limits.
Some companies limit the guarantee to 25% or 50% above the limit shown on the policy - but this valuation method fully indemnifies the homeowner without any depreciation and without a maximum reconstruction payment.
The provision helps you avoid being underinsured in the event of a total loss.
An important caveat typically applies—the homeowner must allow the insurer to set the replacement cost and automatically increase it as needed. Complete underwriting detail is also required (such as square footage and interior construction qualities).
As always – reach out to us with any additional questions.