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Do You Have Extended Replacement Coverage On Your NY Homeowners Insurance?

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NY home reconstruction
Would you risk the loss of up to hundreds of thousands of dollars if your home burns down, just to save $25?

The Extended Replacement Cost Endorsement on a home insurance policy gives the homeowner an added “cushion” of protection if your home becomes a total loss due to a covered peril, such as a fire. In the event of a total loss, your insurance company will pay to have your home rebuilt up to the limit of dwelling coverage you carry on your house.

If your rebuild ends up costing more than your policy dwelling limit, this is where the extended replacement cost protection comes into play, to cover the gap between the policy limit and the actual costs incurred to rebuild.

For instance, your home’s dwelling coverage limit is at $500,000 with a 25 percent extended replacement cost endorsement. In this case, your insurance company would pay up to $625,000 to rebuild your home after a total loss ($500,000 X 1.25).


This is a very important and relatively inexpensive added layer of protection to have on your homeowners policy. In fact, it’s a crucial coverage in times when the cost of building materials and labor rise rapidly due to events that cause shortages in the area in which you live.

Think of the recent Covid pandemic where the price of home building materials skyrocketed right alongside a rapid and significant increase in labor costs. Or, major storms such as hurricanes Katrina, Sandy, and Ida, where vast areas had to be rebuilt suddenly, creating an increase in building supplies and labor costs in New York State.

Without extended replacement cost coverage, a homeowner losing their home in NYS could be out of pocket in the tens to hundreds of thousands of dollars to have their home rebuilt after a total loss.

Besides major hurricanes and pandemics, there are other reasons your home’s current dwelling coverage limit might not cover the cost of a rebuild. Home dwelling amounts are typically determined by your insurer with the use of a reconstruction cost calculator.

Remember, a home reconstruction estimation is just that, an estimate, and could be off the mark to the underside. Also consider that many people invest tens to hundreds of thousands of dollars to  upgrade their home’s interior and/or put on additions without contacting their insurance agent to increase coverage limits.

Depending on the insurer, typical extended replacement cost endorsements can be included on your policy at 10%, 25% or 50% of your home’s dwelling limit. There are some insurance companies that even offer Guaranteed Replacement Cost protection, meaning that there is no limit as to the cost it takes to rebuild your home.

One way to look at whether or not to include extended replacement cost on your homeowners policy is to consider the extent of risk of loss as compared to the cost of the protection. Without extended coverage, your risk of loss can be from the tens to hundreds of thousands of dollars and the cost to protect against this out of pocket loss is $25 to $50 per year for most insurers. To us, it’s a no-brainer decision.

If you have any questions regarding available auto, home and business insurance options, or want a quote to compare against your current policies, please contact us, we’re always glad to help.  The NY Insurance Hub serves Albany, Schenectady, Troy, Latham, Cohoes, Watervliet, Clifton Park, Saratoga Springs, surrounding Capital Region areas and all of New York State from NYC to Buffalo.

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