Rebuild cost glossary
- Replacement Cost Value (RCV)
- The cost to replace damaged property with new property of like kind and quality, without depreciation.
- Actual Cash Value (ACV)
- Replacement Cost Value minus depreciation. Used to pay claims on aged property when RCV coverage is not elected.
- Extended Replacement Cost (ERC)
- A buffer (+25% to +50% typically) above Coverage A that covers post-disaster cost spikes.
- Guaranteed Replacement Cost (GRC)
- An endorsement that pays whatever it costs to rebuild — no upper limit. Rare and increasingly restricted.
- Coverage A — Dwelling
- The limit your insurer will pay to repair or rebuild the physical structure of your home.
- Coverage B — Other Structures
- Detached structures on the property: garage, shed, fence, pool, gazebo. Industry default = 10% of Coverage A.
- Coverage C — Personal Property
- Contents of the home: furniture, electronics, clothing, appliances. HO-3 default = 50% of A; HO-5 = 70%.
- Coverage D — Loss of Use / ALE
- Additional Living Expense during reconstruction. HO-3 default = 20% of A; HO-5 = 30%.
- Coverage E — Personal Liability
- Pays for bodily injury or property damage you cause to others. Industry default = $300,000.
- Coverage F — Medical Payments to Others
- Pays small medical bills for guests injured on your property without requiring a liability claim. Default = $5,000.
- Ordinance or Law coverage
- Covers the cost to bring a damaged home up to current building code during reconstruction.
- Inflation Guard
- An endorsement that automatically increases Coverage A each year to match construction cost inflation.
- HO-3 policy
- The most common US homeowners policy form. Open-peril on dwelling; named-peril on contents.
- HO-5 policy
- Premium homeowners policy. Open-peril on both dwelling and contents. RCV default on contents.
- Dwelling unit
- The primary residential structure on a property — what Coverage A is sized for.