I have come across something called extended replacement cost coverage. Seems like it could be useful if construction costs go up after a disaster. Has anyone here added it to their policy?
Yeah, I’ve looked into it. It basically covers extra costs if rebuilding your home ends up costing more than your policy limit. Usually adds about 10% to 50% over the limit, which is nice if construction costs spike.
@Kit
So it’s for situations where you might be underinsured? I’m guessing it costs extra?
Oswin said:
@Kit
So it’s for situations where you might be underinsured? I’m guessing it costs extra?
Exactly, it’s like a buffer against inflation or rising costs. And yeah, policies with extended replacement cost are usually a bit more expensive, but worth it in disaster-prone areas.
Oswin said:
@Kit
So it’s for situations where you might be underinsured? I’m guessing it costs extra?
I added it to my policy after a friend’s house got hit by a wildfire. Their rebuilding costs were way over the original estimate. That extra coverage can be a lifesaver when the unexpected happens.
It’s good, but keep in mind that extended replacement cost coverage only goes up to a certain percentage over your limit. If rebuilding costs a lot more, you could still end up paying out of pocket.
Sawyer said:
It’s good, but keep in mind that extended replacement cost coverage only goes up to a certain percentage over your limit. If rebuilding costs a lot more, you could still end up paying out of pocket.
Yeah, that’s where guaranteed replacement cost comes in, right? That one covers whatever it costs to rebuild, no matter how much prices go up.
@Bowie
Exactly. Guaranteed replacement covers the full cost, while extended only goes a certain percentage over your limit. So if you’re really worried about big price jumps, guaranteed might be a better option.
I live in a hurricane zone, and my agent recommended extended replacement cost. After a big storm, construction prices tend to skyrocket, so this coverage makes sense for peace of mind.
Joss said:
I live in a hurricane zone, and my agent recommended extended replacement cost. After a big storm, construction prices tend to skyrocket, so this coverage makes sense for peace of mind.
Good point, especially if prices shoot up after a natural disaster. Did your premium go up a lot when you added it?
@Oswin
Not by much, actually. It depends on your area and the coverage amount. For me, it felt like a small price to pay for the extra protection.
Anyone know if extended replacement cost covers code upgrades? I heard rebuilding might require meeting new building codes, which could add to the costs.
Brooke said:
Anyone know if extended replacement cost covers code upgrades? I heard rebuilding might require meeting new building codes, which could add to the costs.
No, extended replacement cost doesn’t cover code upgrades. For that, you’d need something called ordinance or law coverage. That helps pay for bringing your house up to current codes.
@Blake
Got it, thanks for clarifying. Sounds like I should probably add that too if I’m going for full protection.
I think most big insurance companies offer extended replacement cost. I’ve seen it with State Farm and Mercury, and it comes standard with some policies from Chubb and Country Financial. Worth checking with your provider if it’s included or if you need to add it.
@Juno
Good to know. I didn’t realize some companies include it automatically. I’ll check my policy because I’m not sure if I have it or not.