Learn why unlimited replacement cost for your home insurance is a best practice


Quickly learn why having an unlimited replacement cost option on your home insurance provides great security for a minimal charge.


I get asked the question often, “Is my home insured for replacement?” I love that question. And I love giving the answer: absolutely.

Every homeowner’s policy gives you replacement with the structure. But wait a minute, there is more. There’s a cap on how much a company is going to pay to rebuild your house and let me give you an example on a $250,000 house and the different options that we have available.

The first option is that we’re going to pay up to the dwelling limit of $250,000 and we’re going to pay unlimited to rebuild your house. That’s right, unlimited. This is how policies happened 100% of the time in the industry back in the 1990s. But then Hurricane Andrew struck, and insurance companies needed to put a cap on how much they would pay to rebuild.

About a third of our policies offer guaranteed replacement, but the most common limit that we have available is an extra 50%. So on that $250,000 house we’ll pay up to the dwelling limit of $250,000. That’s replacement, and then you get an extra 50% or $125,000 to rebuild. So that $375,000 for the replacement cap should be plenty of coverage.

It’s unfortunate, however, that there are some companies in the industry that are going to give you just 0% extra or maybe only 10 or 20%. But, when we go back to the dollar cost to go from 150% of replacement to guaranteed, that might only be an extra $20 a year charge and it’s for unlimited replacement. It’s peace of mind.

On this new policy we’re going to do two things. First, we’re going to tell you what your coverage is so that you clearly know how we’re going to rebuild your house. And second, we’re going to take the savings from your new policy and use it to help pay for the extra unlimited replacement coverage.

Give McMichael Insurance a call. We have solutions for you, and we have the knowledge to get you the best coverage while being fully informed.

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