Pays a certain amount above the policy limit to replace a damaged home, generally 120 percent or 125 percent. Similar to a guaranteed replacement cost policy, which has no percentage limits. Most homeowner policy limits track inflation in building costs. Guaranteed and extended replacement cost policies are designed to protect the policyholder after a major disaster when the high demand for building contractors and materials can push up the normal cost of reconstruction. (See Guaranteed replacement cost coverage )

"Extended Replacement Cost Coverage" In Context

"In 2009, CDI acted on complaints from Sayre Fire survivors relating to disputes over how much extended replacement cost coverage was available under the New Hampshire Insurance Company policy. CDI was able to secure an additional 110 percent or ..."