Suppose there was a catastrophic storm in your area. When many homes are being repaired and rebuilt simultaneously, the cost for labor and materials can rise, which means your dwelling coverage amount may not be enough to rebuild your home to its pre-loss condition. For an additional cost, many insurers offer extended replacement or guaranteed replacement cost coverage, which may pay for repairs that exceed your policy's limit. Extended replacement cost coverage typically pays for repairs that are 10% to 50% above your policy's limit, depending on your insurer.