Why You Need Extended Replacement Cost Coverage in Your Home Insurance Policy

One of the most important benefits of homeowners insurance in Connecticut is receiving the money you need to rebuild your home if you lose it in a disaster. When you purchase your policy, you should include extended replacement cost coverage to ensure you have enough funds for rebuilding.

What Is Extended Replacement Cost?

Basic replacement cost covers the value of your home without factoring in depreciation. However, the prices of construction materials and labor inflate and building codes change over time, so the original value of your home may not be equal to the amount of money you actually need to rebuild. Extended replacement cost encompasses any extra financial burden.

How Much Does It Cover?

Extended replacement cost covers a specific percentage over the original amount. The rate usually ranges from 20 to 25 percent more than the limit. This coverage is different than guaranteed replacement cost, which has no cap on the finances you can receive for reconstruction, though it will only give you a house equal to, not more than, the value of your original one.

Why Is It Necessary?

You may want to dismiss extended replacement cost coverage in your homeowners insurance in Connecticut to save on premiums. However, it is best to prepare for the very realistic case that your current policy will not be sufficient for building you a new home. The extra money you spend on your policy will be worth it in the long run.

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