Mike and Susan built their "dream home." They insured their home for its full replacement cost.They also added an endorsement that will pay up to an additional 20 percent of the policy limit in case the cost of rebuilding the home after a loss is greater than the policy limit.The basis under which Mike and Susan insured their home is called

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Mike and Susan insured their home for its full replacement cost and added an endorsement that will pay up to an additional 20 percent of the policy limit in case the cost of rebuilding the home after a loss is greater than the policy limit. This basis of insurance is called extended replacement cost. The other choices, actual cash value, valued policy coverage, and guaranteed replacement cost, do not fully capture the specific coverage Mike and Susan have chosen.

Mike and Susan Built Their "Dream Home