Dave Ramsey recommends that you get “guaranteed replacement cost” coverage on your home in case construction costs jump up right at the time that your house burns down, and I found this text at the MOAA website:
Most insurance experts recommend “actual replacement cost,” “guaranteed replacement cost,” or “full replacement cost” language within the policy. This can be particularly important for owners of older or historic homes, for which the true replacement cost could be considerably higher than the current market value of the home. If the policy is for “actual cash value,” then the cost to fully replace the home might not be covered. Certain carriers require a separate full replacement cost rider for historic homes. Failure to cover your home at full replacement value can be a nasty shock in the case of a major loss.
However, I can’t find ANY company willing to sell me such a policy!! Do they even exist any more?
UPDATE: I found one! Yup, it is my current insurance company AAA. It’s not even an option there, they just do it that way. Unlike every other company, that acted like I was a crazy person for asking such a silly question, AAA just said “Of course, after all there might be a hurricane and construction costs might jump up and you wouldn’t have enough insurance.”
UPDATE: I was wrong. My AAA policy is just for 25% over the coverage amount, just like everyone else. Stinker. The odd part is that even though they only insure to the coverage amount, they won’t let me choose the coverage amount.
UPDATE: In the end, I went with AllState. This will save me about $250/year on home owners insurance, and $100/year on car insurance, and $80 in auto club membership. They will cover the cost of rebuilding the house in the event of a total loss, up to 120% of the stated value. So I’ll just have to watch that value very closely from year to year and make sure that it is high enough. At least they will let me change the value up or down if I think that their calculated amount is off.
Several of the insurance quotes I got were just for the tax assessment, which is $20k less than I paid for the house, and definitely not what I would want the insurance to be for. Shameful really, but it made for some really cheap quotes!