When shopping for homeowners insurance, you’ll likely come across the term “guaranteed replacement cost”. This refers to a policy feature that provides extended coverage to rebuild your home in the event of a total loss. But does State Farm offer guaranteed replacement cost coverage?
The answer is yes, State Farm does offer guaranteed replacement cost as an option with their homeowners insurance policies. Here’s an overview of how State Farm’s guaranteed replacement cost coverage works and what it covers.
What is Guaranteed Replacement Cost?
Guaranteed replacement cost is an optional coverage add-on that you can purchase with a standard homeowners insurance policy.
With a standard policy, your dwelling coverage is subject to the stated limit on your policy declarations page. For example, if you have $250,000 in dwelling coverage and it costs $300,000 to rebuild your home after a total loss, you’d receive the $250,000 limit but would be responsible for the additional $50,000.
Guaranteed replacement cost provides extended dwelling coverage above your stated limit in the event of a total loss. Using the same example, with guaranteed replacement cost the insurer would provide up to $300,000 to fully rebuild your home.
Key features of guaranteed replacement cost:
- Covers full rebuild cost even if it exceeds dwelling limit
- Requires insurer to pay reasonable rebuild costs
- Applies only to the main dwelling, not other structures
- Available as an add-on coverage for an additional premium
State Farm’s Guaranteed Replacement Cost
State Farm offers guaranteed replacement cost as an optional endorsement you can add to their standard homeowners insurance policies.
With State Farm’s guaranteed replacement cost coverage, you’ll receive extended dwelling coverage to rebuild your home after a covered total loss. Some key points:
- Must insure home to 100% of estimated replacement cost initially
- Covers the full cost to repair or rebuild the dwelling
- Applies up to 200% of the dwelling limit shown on your policy
- Available at an additional cost above your base premium
So if you had $250,000 in dwelling coverage, State Farm would provide up to $500,000 to rebuild after a total loss. This gives you peace of mind that you’ll have enough to fully reconstruct your home.
What’s Covered vs. Excluded
State Farm’s guaranteed replacement cost covers repairing or rebuilding the main dwelling structure and attached additions. It does not apply to detached structures like sheds, garages, or fences.
You’ll also need to have insured your home initially for 100% of the estimated replacement cost, as determined by State Farm or an independent appraisal. Guaranteed replacement cost won’t apply if you’ve underestimated the rebuild cost.
And as with any insurance policy, State Farm’s guaranteed replacement cost is subject to your policy terms, limitations, exclusions, and conditions. For example, it wouldn’t cover a loss from a non-covered peril like flood or earthquake.
Is Guaranteed Replacement Cost Worth It?
Whether guaranteed replacement cost is worth the extra premium depends on your situation:
- Protection against rebuilding cost overruns
- Peace of mind your home can be fully repaired
- Coverage for 200% of dwelling limit
- Added premium expense
- Still subject to policy limits and exclusions
- Requires accurate home value estimate
For many homeowners, the added protection is valuable despite the higher cost. But consider your budget and risk tolerance when deciding. Your State Farm agent can provide quotes with and without guaranteed replacement cost coverage so you can compare.
The Bottom Line
Guaranteed replacement cost is an optional add-on that State Farm offers to extend dwelling coverage after a total loss. While it comes at an added cost, it provides assurance your home can be fully rebuilt in the worst case. Check with a State Farm agent to learn more and request a quote.
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