Guaranteed Replacement Cost
Definition:
A policy option that pays the full cost to rebuild a home, regardless of policy limits.
Explanation:
Unlike extended replacement cost, guaranteed coverage has no cap. It ensures complete rebuilding even if construction costs skyrocket.
Example:
If your $400,000 home costs $550,000 to rebuild after a wildfire, guaranteed replacement cost covers the full amount.
Why it matters:
This term affects how claims are handled and what payout a homeowner may receive.