In California insurance carriers offering residential property coverage (home) must disclose the different options available. The primary options are:
- Guaranteed Replacement Cost - there is not a limit on how much the carrier will pay to rebuild your home. The limit listed in the declaration's page of the policy does not limit the amount the carrier will pay. This is rarely offered in California due to the unlimited nature of the exposure for the carrier.
- Extended Replacement Cost - the carrier will pay the policy limit plus an additional amount as listed by the endorsement to rebuild the house. Common options are 25% and 50%. In the event a house is a total loss inured to $1,000,000 with the 50% extension option the carrier will pay up to $1,500,000 to rebuild the home.
- Replacement Cost - the carrier will pay up the limit listed in the declaration page with no extension beyond the listed limit and no deduction for depreciation.
- Actual Cash Value - the carrier will pay up to the listed limit in the policy but will settle the loss on a depreciated basis. This is the most restrictive option and should be avoided when any other option is available.
Review your policy to ensure you know which option you have on your policy.
If you would like a free review of your coverage you can reach us at: quotes@BandCIns.com