Insurance Definition: EXTENDED REPLACEMENT COST COVERAGE

By Compuquotes Team on March 27th, 2008

EXTENDED REPLACEMENT COST COVERAGE:

Definition:

  • Pays a certain amount above the policy limit to replace a damaged home, generally 120 percent or 125 percent. Similar to a guaranteed replacement cost policy, which has no percentage limits. Most homeowner policy limits track inflation in building costs. Guaranteed and extended replacement cost policies are designed to protect the policyholder after a major disaster when the high demand for building contractors and materials can push up the normal cost of reconstruction. (See Guaranteed replacement cost coverage)

Information provided by Insurance Information Institute

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