What Is Guaranteed Replacement Cost Homeowners Insurance? 
When you hear the term `` Guaranteed Replacement Cost '' this is referring to a particular loss settlement option that is available in most modern Homeowners ' Insurance contracts , in a nut shell it means that if your home was totally lost as a result of a covered peril , a fire for example , the contract states that the insurance company would pay the full cost of replacing your home as it was using building materials of like kind and quality . It is important , however that your home is insured to it 's calculated replacement or reconstruction value at the beginning in order for that clause to be applicable . 