For full replacement cost coverage in Homeowners Insurance, what percentage must be carried?

To maintain full replacement cost coverage in homeowners insurance, a policyholder typically needs to carry at least 80% of the home's replacement cost. This requirement is crucial because it ensures that the insurance company is able to cover the complete rebuilding of the home in the event of a total loss. If a homeowner insures their property for less than this percentage, they may face a penalty in the event of a claim, receiving only a proportionate payout based on the amount of coverage they have compared to the home's actual replacement value.

Carrying 80% is the standard benchmark used in many policies because it balances affordability with adequate protection. It encourages homeowners to accurately assess and reflect the true value of their home in order to protect their financial interests. This percentage helps prevent underinsurance, ensuring that policyholders are sufficiently covered without excessively high insurance costs.