Level of coverage

When you have finally decided on the best policy, you have three different levels of coverage to choose from. This comes into play when you have to claim your insurance.

Actual cash value

If you choose to get the actual cash value, this means that the policy will have to pay you in cash so that you can replace your home and/or possessions. The price, however, is subject to deductions resulting in depreciation values.

Replacement cost

In this option, the policy pays for the cost of rebuilding or repairing your home. If they are paying for your possessions, there is no deduction for depreciation.

Guaranteed or extended replacement cost

This option offers the highest level of protection. This policy can pay all the costs involved in rebuilding your home, and putting it back the way it was before it was destroyed, altered, or affected by any condition, even if it means your limit will be exceeded. If you choose this policy, you will be saved from increasing construction costs. However, this policy may not available for older homes.

Instead of guaranteed coverage, other insurance companies offer extended coverage. This means that the policy will pay you a percentage that is over your limit. The percentage usually ranges from 20 - 25% above your limit.

Because of its high level of protection, this policy can be a bit more expensive that most policies, but it is the best financial protection you can get.