When purchasing coverage for their home, too many policyholders often make the mistake of simply insuring it for the resale value. However, should a flood, storm or other event occur, they may find that the cost to rebuild far exceeds the original purchase price. This discrepancy can occur for a variety of reasons, including inflated construction costs following catastrophic events that impact multiple homes in a particular area.

To truly protect themselves, extended replacement coverage is essential. This form of coverage provides a benefit over and above the policy limits for replacing a damaged house.…