Do You Need Extended and Guaranteed Replacement Cost Coverage?

Article Posted by Expert Author: Carly Jorge  on 04/08/2013

Do you know whether or not your San Jose homeowners insurance policy will cover the entire cost to rebuild your home when disaster strikes? If not, checking your policy for extended and guaranteed replacement cost coverage is a good idea. This extra coverage takes property value fluctuations, cost of labor and materials and inflation into account at the time you are struck by disaster.

 

Extended replacement cost coverage will pay you an amount exceeding your policy's limit so that you can rebuild a home that was damaged or destroyed. But this coverage has a limit, usually approximately 125% over and above your policy's coverage. Guaranteed replacement cost coverage does not have any preset figures which you must abide by.

 

Those living in earthquake  or hurricane-prone areas can greatly benefit from extended and guaranteed replacement cost coverage. Perhaps the benefit for these residents is greater than for others, as the costs of materials and labor can greatly increase following a natural disaster.

 

Particularly in these areas, adequate homeowners insurance coverage is crucial because of the increased risk of environmental and weather-related damage.  Make sure you understand exactly what you need by discussing this with your insurance agent.

 


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