Replacement cost is always determined to be the number to best indemnify your losses in the event of a claim. In other words, the goal is always to replace or repair your home back to or as close to the original state it was in before it suffered damage. The main difference with guaranteed replacement cost, as state above, is that it accounts for any unexpected changes to bylaws, which may require your home be rebuilt to a condition considered greater than it was in when you purchased insurance – which, without this coverage, would leave you open to incurring the cost of these upgrades yourself.