Extended replacement cost adds coverage above the dwelling limit up to a stated percentage or dollar amount. Example: a $400,000 limit with 25% extended replacement cost pays up to $500,000. If rebuilding costs $560,000, the insured bears the other $60,000.

Guaranteed replacement cost has no preset cap. California bars issuing or renewing a policy as guaranteed replacement cost if it has any maximum based on set dollar limits, percentage amounts, construction cost limits, indexing or another preset limit on dwelling damage (Section 10102(e), (f)). A policy with a 150% cap is extended replacement cost, and disclosure on the declarations page does not cure the label.

Building code upgrade coverage, also called ordinance or law coverage, pays the added cost of meeting codes and zoning laws in effect at the time of loss or rebuilding. The standard fire form gives no allowance for increased cost due to an ordinance or law, so this cost can otherwise be excluded. Extended replacement cost raises the amount available for rebuilding, but it is not the coverage written for code costs.