Losing your home to a natural disaster is something you prepare for but hope to never experience. One thing most may not consider is the actual cost to rebuild. Learn how Guaranteed Replacement Cost can help make sure you won’t be ill prepared to build your house back to its original condition.

What is Guaranteed Replacement Cost?

There are few things in life worse than losing your home to fire or a natural disaster.

Except, that is, discovering in the aftermath that you don’t have enough homeowners insurance coverage to rebuild the house back to the way it was before trouble struck.

If you get guaranteed replacement cost coverage, that is unlikely to happen. Why? Because guaranteed replacement cost will pay for the full cost of rebuilding your house back to its previous size and specifications¹ – right down to the granite countertops, custom bookshelves, and gleaming hardwood floors that you so love.

WHY SHOULD I CONSIDER GUARANTEED REPLACEMENT COST?

“Guaranteed replacement cost gives you peace of mind,” says Bob Buckel, vice president and product manager at Erie Insurance. “The reality is that it’s almost impossible to estimate to the penny what it’s going to cost to rebuild a home. We take that worry away from you.”

With the everchanging price of building materials and labor, it’s easy to see why GRC is the gold standard for homeowners insurance.

REPLACEMENT COST VS. MARKET VALUE: WHAT’S THE DIFFERENCE?

When you purchase a home and start thinking about protecting your investment, this is often the first question. The answer is often: More than you just paid for it, Buckel says.

See also: How Much Does Homeowners Insurance Cost?

“People naturally gravitate to how much they paid for the house, but we’re not insuring it to buy it from you – we’re insuring it to rebuild it in case something happens,” Buckel says. “The question you need to be asking is, ‘How much would it cost if a builder needs to rebuild it?”

This is why replacement cost is often more than market value for your home, or even what you might be able to sell it for.

Figuring out rebuilding costs can be elusive, as a range of factors contribute to what that actual cost might be. Guaranteed replacement cost takes the guesswork out, assuring that you’re covered – even if you need to rebuild your entire home¹.

WHAT ARE LOSS SETTLEMENT OPTIONS IN HOMEOWNERS INSURANCE?

Guaranteed replacement cost is one of a range of choices – called “loss settlement options” in the business – which insurance companies offer to homeowners.

Common loss settlement options include:

• Replacement cost
• Extended replacement cost
• Actual cash value
• Guaranteed replacement cost

Each one works a little bit differently. Different insurance companies offer different things, too. (For example: ERIE does not offer actual cash value loss settlement for the dwelling on your primary home – it’s only available for secondary homes and contents. You’ll learn more about actual cash value below.)

Here’s a breakdown of some of those key differences:

Replacement Cost vs. Guaranteed Replacement Cost

That one word – guaranteed – makes a big difference if you’re facing a total loss of your home. Here’s what makes replacement cost different from guaranteed replacement cost.

• What is replacement cost? When you’re issued a policy with just replacement cost, the insurance company works with you to project how much it would likely cost to fully replace your home. You can see the replacement cost and the specific limit for your policy on your declarations page. Replacement cost is provided up to the limit shown on the declarations page.
• What to expect with replacement cost: The replacement cost amount usually gets increased annually – normally by 2 to 5%each year, depending on your area. In periods of high inflation, the increase could be much higher.

Here’s the big difference: If your home is destroyed and a builder actually estimates that the cost to rebuild is more than that replacement cost figure… then you, as the homeowner, are responsible to make up the difference. That’s why it’s important as a homeowner to make sure you know and are comfortable with how much your home is insured for.

• Here’s an example: If your home is insured at a replacement cost of $200,000, and in reality it is going to cost $250,000 to rebuild, then you either need to come up with an additional $50,000 or find ways to reduce costs… which could result in a smaller, less-appointed house than you originally had.

The premium amount you pay for replacement cost compared to guaranteed replacement cost is typically about the same, although some factors unique to your situation may make one or the other more expensive.

Extended Replacement Cost vs. Guaranteed Replacement Cost

Think of extended replacement cost like a predetermined amount of cash you can dip into in case the cost to rebuild runs high. Still, it’s not the same as guaranteed replacement cost. Here’s how it works:

• What is extended replacement cost? With extended replacement cost, your insurance company assures that a financial cushion exists in the event that cost of rebuilding is more than the estimated replacement cost.
• What to expect with extended replacement cost: Specifically with Erie Insurance, that cushion is 25 percent above the dwelling amount, as shown on your declarations page.

While 25 percent may seem like a lot, there are often circumstances that cause costs to soar well beyond that.

See also: How Named Storms Affect Your Insurance Coverage

“When a hurricane or tornado does a lot of damage in a specific area, the cost to rebuild skyrockets,” Buckel says. “Everyone is trying to rebuild, and the cost of lumber, labor and building supplies all go up. If you don’t have the right coverage, you are not going to have nearly enough to rebuild.”

• Here’s an example: For a home insured at $300,000, extended replacement cost would give you an extra $75,000 to work with. Yet again, if costs go beyond that extra $75,000… you are on the hook to make up the difference, or rebuild a smaller home.

Premium costs for extended replacement cost are generally comparable to guaranteed replacement cost, although some factors unique to your situation may make one or the other more expensive.

Actual Cash Value vs. Guaranteed Replacement Cost

In simple terms, actual cash value is basic coverage. While there’s no doubt that actual cash value is typically your least expensive option, there is also truth in the old saying, you get what you pay for.

• What is actual cash value? With actual cash value, you get coverage for a pre-determined set amount to rebuild your home after a covered loss… and no more. Compared to guaranteed replacement cost, actual cash value often offers the least attractive option as you will likely be required to pay out-of-pocket costs if you aim to restore your home to its previous design and condition.
• What to expect with actual cash value: Some policies also factor in depreciation of things such as an aging roof – so you may end up with even less than the policy states.

See also: Do You Have The Right Coverage For Your Roof?

As we mentioned above: ERIE does not offer actual cash value loss settlement for the dwelling on your primary home – it’s only available for secondary homes and contents.

ASK A LOCAL ERIE AGENT ABOUT GUARANTEED REPLACEMENT COST

Of course, the ideal scenario is that you will never need to use guaranteed replacement cost coverage. Yet, if you do need it, you can rest assured that guaranteed replacement cost coverage will provide the money necessary to rebuild without requiring you to shell out additional cash.

“If it’s a covered loss and costs run high, we will pay whatever the difference is,” Buckel says. “It’s on us, not you.”

Good news for ERIE customers: Guaranteed replacement cost is included in our base ErieSecure Home® policy, a feature that will cost you extra with most insurers².

Upgrading your homeowners insurance to include guaranteed replacement cost is simple¹. Just contact your local ERIE agent to make it happen.

¹Guaranteed Replacement Cost applies to dwelling and requires home improvements over $5,000 to be reported within 90 days – not available with all policies and in all states. Coverage of costs to comply with laws or ordinances is subject to limits. Depreciation will be deducted until repair or replacement is made. Talk to an ERIE agent for more information.

²The information in this blog is a summary and does not include all coverages and benefits available through an ErieSecure Home® policy or apply to all states. Coverage, benefits, limits and deductibles will vary. Conditions, exclusions and limitations will apply. Refer to our disclaimer for more information. Talk to an ERIE agent for state specific policy information.

There’s no denying it: Winter is on its way.

Winterizing your home can help lower your energy bills, prevent bigger more costly repairs later on and reduce the risk of accidents like a home heating fire. (Side note: That’s why having the right homeowners insurance can give you peace of mind, too.)

Ready? Keep reading to walk through the big list of projects to tackle this fall, or download our free PDF printable on how to winterize your home.

FALL HOME MAINTENANCE CHECKLIST

Indoors:

• Windows and doors: Prevent chilly drafts (and pricey heating bills) by checking and replacing any worn weather stripping and caulking any cracks. For loose-fitting doors, slide a draft guard or rolled-up towel underneath to fill the gap. Drapes, curtains, shades and blinds can also help reduce heat loss, according to energy.gov. For your chimney, floors, vents and more, these tips can keep cold air out of your house.
• Fireplace: Check your fireplace and flue system to remove soot or ashes. Check for cracks that could be a fire hazard. If you’re not planning on using your fireplace at all, invest in a chimney balloon, which is a device designed to safely block the opening. (Just remember to take it out before you build a fire next season.) Most importantly, know what fixes are safe for you to tackle and what should be in the hands of a certified chimney sweep with training and proper equipment. Whether this is your first year or fifth year with your chimney, you might need an inspection. Read this guide on chimney inspections.
• Furnace: Before you turn up the heat for the season, start by changing (or cleaning) your furnace filter. (Not sure how to change your furnace filter? Check out these tips.) It’s also a good idea to have an HVAC professional check your furnace once per year. And if you can’t remember the last time you had your heating ducts checked for leaks and efficiency, an HVAC professional can help with that, too.
• Thermostat: For every degree you lower your home’s temperature during the winter, you can save as much as 1%on your energy bill (according to the U.S. Department of Energy). If you have an older thermostat, consider replacing it with a smart model to save on heating costs. Many new thermostats have algorithms to learn your comings and goings so you’re not paying to keep your home toasty warm when you’re not around. Read these additional energy-saving tips for when the cold weather hits.
• Other home heating:  We know they’re cozy but be extra cautious when using space heaters. Space heaters cause an estimated 44% of house fires, according to the National Fire Protection Association. Regardless of how you heat your home, read these tips on using home heating sources safely.

• Drafts and cracks: Cold air will take advantage of any opportunity to sneak into your home. Here’s a list of quick fixes for drafty places:
  • Outlets and switch plates: Use foam-insulating sheets to block cold air coming in from exterior walls.
  • Exposed ducts: Check your attic, basement, and crawl spaces and use sealant to plug up any leaks or cracks on exposed ducts.
  • Floors: Don’t underestimate the power of a thick, cozy rug. Your floors can account for as much as 10% of heat loss in a house.

• Smoke and carbon monoxide detectors: While you’re in the process of prepping your house for the long winter, check smoke detectors and carbon monoxide detectors to ensure they are in good working order. Also, with the increased risk of fire in winter, it’s important to have a family escape plan. You can create a family fire escape plan using these seven tips.

Outdoors:

• Gutters: Clogged gutters, and subsequent water issues, can cause a lot of problems, like foundation problems, wall and ceiling damage, or even insect infestations. (Read more in our related post about what can happen if you don’t clean your gutters.) Start by clearing debris from gutters and downspouts to prevent them from leaking or sagging. Just make sure you do it safely – use a tall, sturdy ladder (check out our guide to picking the best ladder for your DIY job), and don’t forget protective eyewear, gloves and long sleeves to protect yourself against debris, bacteria and pests.
• Roof: Snow can be a heavy burden for an old or damaged roof to handle. Before winter hits, inspect your roof for signs of potential problems, like missing, broken, blistered or curling shingles; cracked caulk or rust spots; or large patches of moss and lichen. Any damaged, loose or missing shingles should be repaired right away.
• Trees and landscaping: It’s a good idea to trim any branches hanging near electric wires before they become a problem. Also, know how to spot the signs of a diseased or dying tree. Heavy snow and strong winter winds can knock down weak branches (or whole trees), so it’s best to do the prep work while the weather’s still mild.
• Lawn equipment: Drain the oil and gas from your mower before storing it for the off-season. Gasoline can separate and spoil in only a few weeks, which could potentially damage your engine.
• Snow removal supplies: Before the first snow, you’ll be glad you thought ahead and bought supplies early. Inspect the bolts, belts and parts on your snowblower; make sure your snow shovel is in good shape; stock up on ice melt or sand; and invest in a snow rake to help clear your roof. Snow accumulation on your roof that exceeds 20 pounds per square foot can be dangerous.

It’s nearly Halloween — the time for superhero capes, princess tiaras and children scampering from porch to porch.

No matter the trick-or-treaters’ game plan, they are ready for a candy bonanza – and that starts with a knock at your door. So don’t let slips, trips and falls dampen anyone’s night. Make sure you fit in a simple safety check before you fill the candy bowl.

If you plan on welcoming trick-or-treaters this year, we have nine tips to help you get ready.

HALLOWEEN SAFETY TIPS FOR HOMEOWNERS

1. Clear the walkways. Toys, rakes, errant stones — clear them all out of the way before trick-or-treating starts. (Wet leaves are an especially slippery culprit!) A quick clean-up is one of the easiest ways to make your home safer from slip, trip and fall hazards
2. Light it up. Turn on your exterior lights, including any flood lights, to help create a safe path for trick-or-treaters. Check these early so you have time to replace any burned-out bulbs.
3. Corral your pets. With all the doorbells and visitors, Halloween can be stressful for your animals  – and even a well behaved pet can bite or scratch when they feel anxious. A constantly opening door makes it easy for furry friends to escape, too A better idea? Keep pets in a secured room or wing of the house.
4. Lock all other doors. Mischief can happen when you’re doling out candy, so play it safe by locking all of your other doors. (That includes any garage and car doors, too!) The FBI reports that approximately 30% of all burglaries are committed without force courtesy of an unlocked door or window.
5. Check your railing. If it feels rickety, take the time to secure it in place.
6. Skip candles. Yes, they give your pumpkins that spooky glow. But a live flame isn’t worth the fire risk you consider all the draping costumes and accessories that will whiz by the flame. Pro tip: Opt for the flameless variety instead.
7. Consider your candy choices. Many kids are allergic to candy ingredients like nuts. To help them enjoy the holiday, The Teal Pumpkin Project encourages leaving a teal pumpkin on your stoop to let trick-or-treaters know that you have non-food treats like stickers and toys on hand.
8. Pick a good spot. If you have a lot of stairs or a long, winding path, consider handing out candy at the end of your driveway. Another option is to host a ‘trunk-or-treat’ event at another location.
9. Comb your yard. With all luck, the kiddos will stay on sidewalks and driveways. But they may wander. Clear out sticks, objects or other tripping hazards from your yard.

Check out these blogs for more tips and tricks (the good kind) on Halloween safety:

• A Parent’s Guide to a Fun (and Safe!) Halloween
• 5 Trick-or-Treating Tips for Tweens and Teens
• 4 Lesser-Known Halloween Safety Tips

Trees can be tricky, but for the most part homeowners are responsible for what falls into their own yard. So if a storm causes your neighbor’s tree to fall in your yard, your homeowners insurance could help cover the cost of removing the tree and remedying the damage it caused on your property, after your deductible.

The same is true in reverse: If a tree on your property falls in your neighbor’s yard, your neighbor should contact his or her insurance company to determine what type of coverage is available for damage or cleanup in their yard.

In most cases, neighbors are able to work things out without too much trouble. Depending on the extent of the damage, you may need to file a homeowners insurance claim. Your homeowners insurance may or may not cover the cost of tree cleanup, depending on your policy and the company you work with.

Good news: Homeowners insurance from ERIE typically pays for the cost (subject to sublimits) of removal of fallen trees if it’s due to a covered peril, such as a storm.

If there’s ever an issue between neighbors, you can rely on your claims adjuster to help straighten everything out.

THE CLAIMS PROCESS

If a tree falls on your house, the first thing to do, if it’s safe, is to try to prevent further damage to your home and property. Make sure to take some photos to document what happened. Then call your insurance agent, who can explain your options and help you understand if and how to file a claim. When you file a claim, a claims adjuster will come by to evaluate the damage and explain how your homeowners coverage comes into play. It’s recommended that you call your claims adjuster before you contract to have the tree removed.

Sometimes trees fall on cars. If it’s not safe or possible to remove the tree from the car yourself, you should call a professional to remove it. (Again, talk to your insurance agent and a claims adjuster first and take a few photos of the fallen tree on your car.) Depending on the damage and terms of your insurance coverage, the optional comprehensive coverage you may have under your auto policy could provide coverage for the loss.

PREVENTING TREE DAMAGE

Preventive measures matter when it comes to trees. Start by looking for signs of distress such as dead limbs, cracks in the trunk or major limbs, leaning to one side and branches that are close to a house or power line. Mushroom growth on the roots or bark can also signal trouble.

Homeowners should be concerned about the health of their trees. It’s possible for you to be held responsible for resulting damage to your neighbor’s house or property, if your tree falls due (in whole or part) to your own neglect. One of the best things to do is to regularly have large trees trimmed. (The Tree Care Industry Association lists accredited tree care professionals.)