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Guaranteed Replacement Value Insurance

What Is Home Replacement Cost Coverage?

Does your home insurance include home replacement cost coverage?
If not, you may not have the protection you think you do.

All homeowners should buy "guaranteed replacement value" homeowners insurance. This means that their home will be rebuilt in the event of a disaster - no matter what the cost. Of course, many of you may be thinking that this is what would happen anyway, right? Wrong. Not every home insurance company offers it, because home values have increased substantially in recent years, it probably costs more to build a house than when you originally purchased your home and your insurance policy.

The good news is that guaranteed replacement value policies will absorb the increased costs and provide the homeowner with a cushion if construction prices increase.

However, you can get a higher level of protection from an extended home replacement cost policy. The extended home replacement cost option will pay a specified percentage over the limit to rebuild your home. If building costs unexpectedly go up in your area, an extended home replacement cost policy will pay up to 25 percent more than the limit of a policy.

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