Replacement cost value applies to several areas of insurance. How does it come into play in the area of wildfire insurance? Keep reading to learn more about wildfire replacement cost coverage.
How Wildfire Replacement Cost Coverage Works
Replacement cost value is the type of coverage that allows you to rebuild at current new-build prices. It covers the cost of rebuilding your home, but only up to a defined limit.
It’s important to ask a general contractor what your area’s current cost to build per square foot is. Afterward, multiply it by your home’s square footage to ensure you’re fully covered.
Some states also have policies that offer guaranteed/extended replacement costs. This replaces your home regardless of the cost of building supplies or labor spikes after the disaster. This coverage typically costs more.
Additionally, in some areas, building codes have changed considerably over the past 30 years. Hence, folks shopping for policies in wildfire-prone areas should consider getting insurance that provides updated building code coverage during a rebuild. This ensures you have enough money to build your new home up to today’s codes.
Loss-of-use coverage, also called additional living expense coverage, is another item worth considering. This coverage covers hotel costs and other expenses incurred while you cannot use your home during an evacuation or a rebuild.
Additional Information on Wildfire Insurance
Wildfire Response Endorsement or Wildfire Defense Services is another protection in addition to your insurance coverage. In wildfire-prone areas, paying a retainer for this service might make sense. It is like having a private fire department ready to respond if a wildfire threatens your home. Some insurers, like State Farm, added this coverage for all policyholders.
With this coverage, a class 6 fire engine team is sent to help harden a wildfire that threatens your home. They will also close windows and doors, clear defensible space, set sprinklers, and lay flame-retardant foam.
