What does Guaranteed Replacement Cost mean? Read on to discover the definition & meaning of the term Guaranteed Replacement Cost - to help you better understand the language used in insurance policies.
Guaranteed Replacement Cost
A property insurance valuation option found in some homeowners policies. The policy pays the full cost of replacing the home even if this amount exceeds the policy limits. This valuation method fully indemnifies the insured without any depreciation and without a maximum reconstruction payment. The provision helps the insured avoid being underinsured in the event of a total loss. An important caveat typically applies to this provision the home owner must allow the insurer to set the replacement cost and automatically increase it as needed. Note that guaranteed replacement cost coverage approaches can vary by state and are not available in every state or from every insurer.
We hope the you have a better understanding of the meaning of Guaranteed Replacement Cost.