Losing their home to either a fire or natural disaster is one of the most challenging experiences for a homeowner. To make matters worse, some homeowners, unfortunately, realize they don’t have enough home insurance coverage to rebuild their house to its original condition.A person’s home insurance replacement cost dictates how much coverage they need to resolve this issue. Homeowners should be aware of this should they ever encounter this scenario first-hand. Muller Insurance is an independent insurance agency serving New Jersey, New York, Connecticut, Pennsylvania, and other states. Here, we briefly explain the different types of coverage and their advantages.Guaranteed Replacement Cost vs. Extended Replacement Cost Replacement cost coverage enables homeowners to rebuild their homes to a like-new condition, should something happen to them. Nearly every homeowner’s insurance policy has replacement cost coverage, but they are not all the same. Furthermore, the replacement cost can change over time, making it necessary to review your home insurance policy every year to verify you have sufficient coverage.Understanding the difference between guaranteed replacement cost and extended replacement cost is crucial as a homeowner looks to replace their damaged home. The differences are as follows:Extended Replacement CostThis type of home insurance replacement cost provides extra coverage, typically between 10% and 50%, above the homeowner’s dwelling coverage for a rebuild. For example, say a house is originally insured for $250,000. With a 20% extended replacement cost coverage policy, the homeowner could receive an additional $50,000, if the $250,000 does not cover the restoration costs.This type of coverage is especially beneficial for homeowners if the cost of materials or labor has risen in their area since the house was constructed. Depending on where you live, you may pay more to obtain an extended replacement cost. For instance, the coverage may be more expensive if you live on the coast or in an area highly susceptible to natural disasters. Additionally, homeowners need to note that replacement cost refers to the amount of money to rebuild the home –– not its actual market value.Guaranteed Replacement CostHaving guaranteed replacement cost means the homeowner’s insurance is required to pay for the actual replacement cost of the home at the time insurance company claims are filed. They are required to pay the amount even if it extends well above the amount shown on the dwelling.Homeowners can have peace of mind knowing their home is sufficiently protected with a guaranteed replacement cost. According to Consumer Reports, 60% of homes are underinsured by about 20%. In other words, even though they have replacement cost coverage, they may not have enough coverage to replace their home.Guaranteed replacement cost is especially crucial if a homeowner lives in an area prone to natural disasters such as hurricanes, wildfires, or tornadoes. When these tragic events hit, building supplies are in high demand for the region, causing their prices to skyrocket and affecting the replacement costs of homes. However, the downside is that guaranteed replacement cost is not available in every state, making it unhelpful depending on your place of residence.Advantages of Working With Our Independent AgencyThe advantages to working with Muller Insurance include:Personalized service: Client’s insurance needs vary, and we pride ourselves on offering services tailored to your needs. Our dedicated team takes the time to build strong relationships with our clients to understand the types of coverage that best suit them.Independent advice: Being an independent insurance agency means we work for our clients and no one else. This unique position allows us to offer more coverage options, as we represent over 25 different insurance companies and are licensed in over 30 states.Better value: Our advisors work diligently to offer clients not only the best coverage but the best value, as well. We are constantly searching for the best rates and looking for saving opportunities.Consult About Home Insurance Replacement Cost With Muller InsuranceWith over 115 years of experience, Muller Insurance has become one of the most trusted agencies in New Jersey, New York, Connecticut, Pennsylvania, Nevada, and other states. Our independent insurance agency treats everyone as if they were family, providing exceptional service and working hard to offer the best possible rates. Homeowners who are unsure of how much home insurance replacement cost coverage they need can consult with Muller Insurance. We pride ourselves on offering quality insurance policies to residents. For more information, please contact us today.