What is extended replacement cost (ERC) mean on my homeowners’ policy?
An extended replacement cost (ERC) can give you a little extra insurance coverage. When insurance companies determine the replacement cost of your home, which is used to determine Coverage A, they are using the best available information they have at the time. Purchasing extended replacement cost would allow your Coverage A to increase, which helps offset the higher costs you would otherwise have to pay out of pocket.
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Insurance Question from West Palm Beach, FL
Asked on 05/10/2010
What is extended replacement cost (ERC) mean on my homeowners’ policy? NULL
Answer given on May 21, 2010
When an insurance determines the replacement cost of your home, which is used to determine Coverage A, they are using the best available information they have at the time. However, when your home is damaged, it could be that materials and labor are more expensive than was originally anticipated. An example is after a catastrophic event – hurricane, tornado, etc. Since hundreds of households all need repair at the same time, materials and labor are more expensive, and harder to come by. In this case the replacement cost is much higher. Purchasing extended replacement cost would allow your Coverage A to increase, which helps offset the higher costs, otherwise, any costs above your Coverage A are your responsibility.
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