Coverage gaps · Rebuild
What happens if rebuilding exceeds my coverage?
Construction costs jumped 35–45% in many U.S. markets between 2020 and 2024. Dwelling limits on many policies didn't keep up. If a total loss hits a policy that's $100k–$200k under today's rebuild cost, the homeowner eats the difference — unless one of these endorsements is on the policy.
Standard dwelling limit (no endorsement)
Carrier pays up to your Coverage A limit. Everything above is yours. On a total loss in a market where construction costs jumped 30%, this is a six-figure gap.
Extended replacement cost (most common upgrade)
Adds 20–50% above your dwelling limit. So a $400,000 dwelling with 25% extended RC pays up to $500,000. Usually $40–$120/year.
Guaranteed replacement cost (rare but bulletproof)
Carrier pays to rebuild the home to its original specs regardless of cost. Becoming rare, and usually limited to high-end carriers (Chubb, AIG Private Client, Pure).
Ordinance & law coverage
Separate from rebuild cost — covers the extra cost of bringing the rebuilt home up to current code. On older homes, this is often the difference between a workable claim and a five-figure shortfall on its own.
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Frequently asked
What happens if my home is destroyed and I'm underinsured?
You receive your dwelling limit (minus deductible) and pay the rest out of pocket, financed, or by scaling back the rebuild. There's no recourse against the carrier as long as they paid the policy limit.
How do I know if I'm underinsured?
Compare your Coverage A dwelling limit to today's construction cost per square foot in your market × your finished square footage. National averages run $200–$350/sq ft for standard construction; higher in CA, the Northeast, and after recent disasters.
Does extended replacement cost have a cap?
Yes — typically 20%, 25%, or 50% above your dwelling limit. Guaranteed replacement cost has no cap but is much harder to find now.
Keep reading
Topic Hub: Coverage Gaps
Every coverage gap we see, in one place.
Read moreCoverage gapsSewer Backup Coverage
The $40/yr endorsement that turns a denied claim into a paid one.
Read moreCoverage gapsMatching Coverage
Why your claim replaces one slope, not the whole roof.
Read more CalculatorHome Replacement Cost Calculator
What it costs to rebuild today — not what Zillow says.
Try the calculator