Homes can be destroyed in natural disaster, fire or other catastrophes. If you don’t have the proper protection, the rebuild and repair can be an overwhelming expense. That’s where extended replacement coverage can help. 

When purchasing coverage for their home, policyholders often make the mistake of simply insuring it for the resale value. However, should a flood, storm or other event occur, they may find that the cost to rebuild far exceeds the original purchase price. This discrepancy can occur for a variety of reasons, including inflated construction costs following catastrophic events that impact multiple homes in a particular area. 

To truly protect themselves, extended replacement coverage is essential. This form of coverage provides a benefit over and above the policy limits for replacing a damaged house. That means, should a covered loss occur, extended replacement coverage will kick in and pay up to a specified percentage over an insured’s policy limit—sometimes as much as 125 percent. 

When shopping for homeowners insurance, extended replacement coverage is critical. While skimping on this protection may lower your coverage costs slightly, those savings will mean nothing should disaster strike and lead to tens of thousands of dollars in losses.  

Homeowners insurance can be complicated, and it’s important to discuss your unique needs with an expert.