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Just because your home insurance replacement guarantee is a coverage on your policy doesn't mean it will actually provide that guarantee when you need it. There are requirements written in you policy that you must follow in order for you to be eligible for this extended coverage so it's important to understand your policy. BTW, every insurance carrier will word this section of your policy so you'll want to read your specific policy to understand your requirements. Not all policies are the same!

Here are the 4 Critical Things You Must Do In Order for Your Home Insurance Replacement Guarantee to Kick In:

  1. Insure the dwelling to 100% of its replacement cost as agreed by us;
  2. accept any yearly adjustments by us of Coverage A reflecting changes in the cost of construction for the area;
  3. notify us of any addition or other remodeling which increases the replacement cost of the dwelling $5,000 or more within 180 days of the start of construction; and
  4. repair or replace the damaged dwelling.

Failing any of these will exclude the home insurance replacement cost guarantee.

Often times, insured's will want to cover their home for less than the replacement cost calculation because this will lower their premium and "besides, we have 120% replacement guarantee" they say. Unfortunately, I have to remind them of the provisions within their policy. Also, at renewal is when the yearly adjustments are made by the insurance carrier. Most of the time, an increase in coverage also increases the premium. Insureds often forget that this yearly adjustment is part of the requirement in order to have Home Insurance Replacement Guarantee and they request the coverage to be reduced to last year's figure.

Finally, as home values are increasing, homeowners are remodeling kitchens and bathrooms to update the look and increase the value of their home. If you spend more than $5,000 you need to call your insurance agent to recalculate your home insurance replacement valuation so that you're not caught short if a major claim, such as a fire, were to occur.

As an independent insurance agent, I can help you calculate a replacement guarantee that closely matches your home so that you're not over- or under-insured. We represent many insurance carriers to help you shop for the best policy at the lowest possible price for your home insurance needs. Call us for competitive review.

Author Richard Morris

Richard Morris, an independent insurance agent in Gilbert, Arizona and Chandler, Arizona, has been serving and helping Arizona families and businesses with all their insurance needs for over 24 years. Visit his website at to see all the ways he can help you with your insurance needs or call the office at (480) 336-2707 or toll free at (888) 907-9349. Connect with Rich on Google+ and Twitter.

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