Guaranteed Replacement Cost

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The peace of mind that having the Guaranteed Replacement Cost endorsement can offer is priceless—and surprisingly affordable.

Whether you’re just about to purchase a starter home, or you’ve been in the same house for decades, the team at BayCoast Insurance believes it is very important for you to know about the invaluable benefits of having the guaranteed replacement cost endorsement.

By adding this increasingly talked-about endorsement to your home insurance policy, you can get more than just enhanced protection for your property. It can give you a level of confidence in your financial ability to rebuild your home after a disaster that may not be achievable with the standard replacement cost included in your policy or with an extended replacement cost endorsement.

You might think that purchasing this added level of home insurance coverage—and having a greater sense of security—would be accompanied by a hefty additional fee. Instead, the BayCoast Insurance straight talk on this homeowners policy option is that it is highly cost-effective, often adding as little as $100 to $150 a year to your homeowners policy.

If you still need a little more information before calling the BayCoast Insurance team about the guaranteed replacement cost endorsement, we understand. That’s why we are sharing the following three reasons why homeowners should consider getting this endorsement.

Reason #1: Construction costs are through the roof and are expected to remain high.

The pandemic disrupted a lot of things, not the least of which was the supply chain for key home construction materials such as wood, metal, rebar, and concrete. Over the past year, building materials have become increasingly difficult to come by, and, as you are likely aware, this shortage has driven up the cost of some of these materials by more than 300%.

In this marketplace, if a homeowner with the standard replacement cost or an extended replacement cost endorsement is faced with unexpectedly having to rebuild their home after a catastrophe, they may be shocked to learn that the elevated price of construction materials, as well as high labor costs, is going to directly impact their ability to return their home to its pre-disaster condition. The actual construction expense could be tens of thousands of dollars more than the limit for which they are insured.

Now for some straight talk from BayCoast Insurance

The only way for you to be reasonably certain your home will be replaced to the same footprint, function, and features it had before a disaster is to purchase guaranteed replacement cost coverage. Regardless of how much construction costs exceed your home’s original replacement cost estimate at the time of a loss, having this extended coverage may cover the full cost of the rebuild.

Reason #2: Climate change is fueling more frequent and powerful storms, and the result is catastrophic homeowner losses.

When community-wide catastrophes occur such as tornados, hurricanes, and wildfires, thousands of businesses and homeowners end up competing for resources to repair their properties as quickly as possible. As demand for contractors and building supplies in the area sharply increases, so typically does the cost of construction and labor, often to the point where the expense to rebuild a home is considerably more than the limits of a homeowner’s standard or extended replacement cost policy. This type of situation can leave an insured having to choose between settling for what their current insurance allows or paying significant sums out of pocket to return their home to the way it was before the disaster.

Now for some straight talk from BayCoast Insurance

Experts predict that extreme weather events are going to continue to occur with more force and frequency across the United States. If such a disaster should strike your community, you don’t want to be forced to wait for construction costs to lower so you can rebuild your home to its pre-catastrophe condition. Instead, if you want peace of mind that your insurance will cover your home’s construction costs, the best way to ensure this is to choose guaranteed replacement cost.

Reason #3: As the home renovation trend continues to build, so do home values.

If everyone in your neighborhood seems like they’ve taken on a remodeling project over the past year, it’s no surprise. Numerous news outlets have reported that decks, pools, and home gyms have been extremely popular home additions during the pandemic. In addition, the number of kitchen and bath remodels, home extensions, and security and privacy improvements like fence installations has doubled. While many enterprising homeowners may realize that these types of improvements drive up their property value, they may not know these renovations also often change their dwelling coverage requirements.

Now for some straight talk from BayCoast Insurance

If you joined the home renovation craze but have yet to inform your local insurance agent, then you may have a risky coverage gap in your standard or extended replacement cost home insurance policy. Without an updated valuation of your home, if a disaster strikes, your insurance is probably only going to cover the cost of rebuilding your home at the original valuation, which does not include all the improvements you’ve made since. This could leave you paying for all that renovation work to be redone, if you want the very same home you had before disaster hit.

With the guaranteed replacement cost endorsement, though, even if you have not reported your renovation project to your insurance professional, your insurance may still honor a rebuild that includes the improvements you’ve made since you bought your house. However, to make sure there are no hiccups in the claims process, you should keep your agent informed of all changes you make to your home, so they can recommend whether your property’s replacement value should be reassessed, and your coverage adjusted.

It’s important to know that replacement cost programs can vary greatly by carrier. In addition, each carrier has different eligibility requirements for its replacement cost program, and not all homes will qualify for this endorsement. The team at BayCoast Insurance is here to help you understand your specific insurance company’s program, what it offers, and its eligibility requirements.

We know you may have many more questions about the guaranteed replacement cost endorsement. The BayCoast Insurance professionals are here to support you in any way we can and help you explore the possibility of adding this endorsement to your homeowners program. For more information or to get a quote on what it will cost to enhance your current home insurance coverage with guaranteed replacement cost, please contact us at 508.491.3100.