Basically, it means that if your home is destroyed by an insured peril, the insurance provider guarantees that they will rebuild your home, even if it costs more than the limit of insurance on your policy.
It’s a very important coverage provided by most home insurance policies today. This is more advantageous than extended building replacement cost coverage, as it will guarantee replacement. Extended replacement coverage will only cover up to a specified limit.
Be aware that very often, you must comply with certain conditions in order to qualify for this coverage, such as:
These restrictions may vary from one provider to another, so it’s important to review your specific policy with your agent. If you don’t comply with all of the conditions, your coverage will be limited to the amount shown on your policy. Hopefully, this will be enough to rebuild your home. If it isn’t, you could face a huge out-of-pocket expense.
Some providers do not offer guaranteed building replacement on rental or vacation properties; instead, coverage is limited to the amount shown on the policy. At Square One, we automatically include guaranteed building replacement on all of our policies, whether it’s your primary residence, rental property, or vacation property.
You’ve just been to see your agent to get home insurance. The first thing they did was calculate the replacement value of your house. It came out much higher than you expected, and in some cases, even more than you paid for it. You might be wondering why. Well, there are several reasons and examples why this may happen:
Your insurance agent will have a replacement cost estimation calculator that will help to determine the rebuilding cost of your home. Be sure to let your agent know if you have any special features, such as granite countertops, custom skylights, or river rock fireplaces.
What do bylaws have to do with home insurance? Well, if your home burns down, it will have to be rebuilt to comply with today’s building codes and bylaws. Here are a couple of examples of how bylaws can affect the replacement cost of your home:
When you purchase home insurance, ask your agent if the policy provides bylaws coverage. Most policies include a small amount of protection and may offer additional coverage for an extra charge for the endorsement of 100% replacement costs.
You may think you don’t need much bylaw coverage if your home is brand new. After all, a new home should be constructed to meet all the current bylaws and building code requirements. But remember, your municipality may require your house to be rebuilt, even if it’s only partially damaged. This can happen to a home of any age, and as mentioned, could be a tremendous expense.
You can rest easy once you know your home is insured to its proper replacement cost. At Square One, we automatically cover the cost to upgrade your building after an insured loss so that it complies with the current codes or bylaws. No limit. This is a very important coverage that is often overlooked. Without it, you could be out thousands of dollars. If you would like more information on guaranteed or extended building replacement, feel free to contact Square One at 1.855.331.6933.
There are no laws dictating that guaranteed building replacement is mandatory, but it does make things easier should something catastrophic happen that renders your home unliveable. However, if a catastrophic event were to severely damage your home, the last thing you want to worry about during the rebuilding process is if you have enough coverage to ensure your new home is rebuilt to the same quality and standards as the former. Also, guaranteed building replacement cost coverage takes into account changes in bylaws so any mandatory upgrades that are needed to comply with city standards are included.
Square One automatically accounts for the cost to upgrade your building to make sure it’s up to code in the event of a rebuild.
The main difference between guaranteed replacement and extended replacement cost lies in the overall coverage provided – specifically: how much coverage will be offered in the event.
Extended replacement cost will only account for a predetermined percentage of your determined coverage limit. In the event of a total loss, it may turn out that this coverage will leave you open to incurring costs as you enter the rebuild process.
Guaranteed replacement cost, as its name implies, grants total coverage for the complete cost of replacing and rebuilding your home, including any unexpected changes in bylaws or building specifications that may have arisen between your home’s original construction and the current day. Simply put: guaranteed replacement cost offers the most comprehensive coverage available.
Replacement cost is always determined to be the number to best indemnify your losses in the event of a claim. In other words, the goal is always to replace or repair your home back to or as close to the original state it was in before it suffered damage. The main difference with guaranteed replacement cost, as state above, is that it accounts for any unexpected changes to bylaws, which may require your home be rebuilt to a condition considered greater than it was in when you purchased insurance – which, without this coverage, would leave you open to incurring the cost of these upgrades yourself.
For more information, or to get a home insurance quote that includes guaranteed building replacement, contact Square One at 1.855.331.6933.
Even when you take precautions, accidents can happen. Home insurance is one way to protect your family against financial losses from accidents. And, home insurance can start from as little as $12/month.