Coverage Types
Extended Replacement Cost
Definition
A homeowners insurance endorsement that pays above the dwelling coverage limit to rebuild or repair the home after a covered loss, typically 25% to 50% above the stated policy limit. This provides a buffer against unexpected increases in construction costs following widespread disasters.
In Zach’s Words
“Extended replacement cost is your 'just in case construction costs go crazy' buffer. Say your home is insured for $500,000 to rebuild, but after a wildfire every contractor in town is booked and lumber prices spike. Suddenly it costs $600,000. With ERC — usually 25% to 50% extra — your policy stretches to cover the overage. In the Bay Area, where rebuilding costs can skyrocket after a disaster, this endorsement is an absolute must-have.”
— Zach Nadler, CIO