Home Insurance Guaranteed Replacement Cost, what is it?
Most homeowner’s insurance policies insure your home and its contents for Replacement Cost, but what does this really mean? Very simply, the insurance carrier will pay to replace your home at the current cost of construction.
So, for example you paid $100,000 to renovate your kitchen 10 years ago, it may cost $125,000 to do that same renovation today. In the event of a covered loss, the insurance carrier will pay you the $125,000 and not figure any depreciation since your cabinets and appliances were 10 years old.
It is standard practice of most insurance carriers to insure your home at replacement cost, and for most homes this is suitable.
When obtaining insurance for your unique high value home, you should request “Guaranteed Replacement Cost”. Most of the standard home insurance carriers do not offer this option and is only available from carriers that specialize in insuring unique and custom homes.
The difference is that when your home is insured for Guaranteed Replacement Cost, the insurer will guarantee that they will pay to replace your home in like kind and quality of construction, even if that cost exceeds the limits of insurance.
So, using the previous example of a renovated kitchen, if you have Guaranteed Replacement Cost and had installed hand selected Carrera marble, the carrier will pay the increased price to import similar tile. They may even pay to replace tile in an adjacent undamaged area of your home since the new tile will no longer match. These are features that your standard home insurance policy does not have.
If you would like more information on insuring your unique home, please contact me at JRRusso@KJEConsultants.com. Our agency specializes in unique and hard to place insurance. We will make sure you have all the necessary coverage to protect your assets.
John R. Russo
President, KJE Consultants, LLC
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