What Does Extended Replacement Cost Mean?

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What does Extended Replacement Cost mean? Read on to discover the definition & meaning of the term Extended Replacement Cost - to help you better understand the language used in insurance policies.

Extended Replacement Cost

Extended Replacement Cost

Extended replacement cost refers to an insurance policy that usually provides a benefit over and above the limits specified by the policy for replacing a damaged house. This coverage could pay a benefit ranging from approximately 120 to 125 percent. Conventional homeowners' policies often do not track (or do so on a limited basis) the inflation in building costs. However, a major disaster could lead to a high demand for building contractors and materials. The higher-than-usual demand would inflate the normal costs of reconstruction.

We hope the you have a better understanding of the meaning of Extended Replacement Cost.

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