Levels of homeowners coverage

Originally from Property Casualty 360

If you plan on rebuilding your home, you must know what insurance you have.

Nicholas Springer

Actual cash value

As mentioned earlier, when a policy pays actual cash value, that means it pays to replace your home or property for what it is worth, minus depreciation.

Replacement cost

Policies with replacement cost will pay the cost of repairing or rebuilding your home or replacing your property without a deduction for depreciation.

Guaranteed/extended replacement cost

Guaranteed or extended replacement cost is the highest level of coverage. These policies pay whatever it costs to rebuild your home as it was prior to the offending peril – even if it exceeds the policy limit.