The cost of your Homeowners Insurance is based in large part on the limit of insurance it would take to replace your home in the event of an insured claim. Many policies have a Guaranteed Replacement Cost (GRC) endorsement that basically says that the insurance company will put your house back into the same state as it was before the loss. In the case of older homes, the replacement estimator tools being used will increase the value of the home to account for home finishes from that era to repair or rebuild the house. As many of these features and the trades to construct them are limited, this can increase the required limit of insurance of the home by as much as 30% thus increasing the insurance premium.

One of our insurance companies now offers Functional Replacement Cost (FRC) as an alternative to GRC for homes constructed prior to 1940.  What this endorsement does is value the home as if it was built using modern day construction methods. Drywall instead of plaster, small baseboards, etc. In the case of an insured loss, the repairs or rebuild would be done to today’s standards. The required insurance limit would therefore be lower, resulting in lower insurance premium.

If you would prefer to have modern components used in the case of a total or partial loss, you should consider this endorsement.