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Common Construction vs. Similar Construction: Choose the Right Replacement Cost Coverage to Get Your Home Built Back Like it Was Before Your Insurance Loss.

If your home is seriously damaged or destroyed by an event like a fire, hurricane, or

tornado, you likely want it rebuilt back with at least the same type and quality of

materials with which it was built. For instance, if you had a slate roof, you likely want

slate; if you had wood siding, you likely want wood siding rather than cheaper siding; If

you had wooden cabinets, you likely want those type of cabinets and not cheaper

particle board cabinets. If this is the case, you want to make sure that you choose a

replacement cost coverage that provides repair or rebuilding with “similar construction”

or “like kind and quality” rather than “common construction.”

Homeowners' insurance companies often allow policyholders to choose between two

different replacement cost coverage options: similar construction and common

construction. State Farm calls these coverages “AI- Replacement Cost Loss Settlement-

Similar Construction” and “A2- Replacement Cost Loss Settlement Common

Construction.” Similar construction is more expensive but requires the insurance

company to pay for the equivalent of what existed before the loss. Common

construction is cheaper but only requires the insurer to pay for “common construction

and materials commonly used by the building trades in standard new construction.” It

specifically does not pay for “the cost to repair or replace obsolete, antique, or custom

construction with like kind and quality.”

So take a look at your policy declaration page and make sure that you see “similar

construction” listed as your loss settlement method for your dwelling coverage. If you

aren’t sure, then verify with your agent or broker to make sure that you have the correct

coverage. If not, you may find yourself underinsured when it comes time to put your

house back together the way you want it.

If you have any questions, or need any help with a claim, please contact us at (205)894-8900.

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