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What Is Dwelling Insurance Coverage?

A homeowners insurance policy has four main components. Dwelling insurance coverage, or "Coverage A," is the main component of your homeowners insurance policy, not all of it. Dwelling coverage helps pays to rebuild or repair damage to your home's physical structure and additional structures like fences, storage sheds and detached garages. However, dwelling coverage does not cover belongings and land. Whether you have a homeowners insurance policy on a primary residence or insurance on a second home, it's important to have adequate dwelling coverage in case you ever need to rebuild that home.

How Is Dwelling Coverage Different than Home Insurance

Dwelling coverage is one type of coverage under the larger umbrella that is homeowners insurance. A standard home policy will also include:

  • Personal property coverage: Covers your personal belongings, such as furniture, appliances, clothing and electronics.

  • Loss of use coverage: Pays for living expenses, such as hotel bills and meals, while your home is uninhabitable after a covered loss (e.g., your home is being rebuilt after a fire).

  • Liability coverage: Pays for legal expenses and reimbursement when you can be held responsible for another person's injuries or property damages while they were on your property.

What Does Dwelling Insurance Cover?

Dwelling insurance typically covers hazards listed in a home insurance policy. According to The Insurance Information Institute, a homeowner should have enough dwelling coverage to protect against the following named perils:

  1. Fire or lightning
  2. Windstorm or hail
  3. Explosion
  4. Riots
  5. Aircraft
  6. Vehicles
  7. Smoke
  8. Vandalism
  9. Theft
  10. Falling objects
  11. Weight of ice, snow, or sleet
  12. Accidental discharge or overflow of water or steam
  13. Sudden and accidental tearing, cracking, burning, or bulging
  14. Freezing
  15. Sudden and accidental damage due to short circuiting
  16. Volcanic Eruption

What's an Open Peril Policy?

Dwelling coverage doesn't protect perils and events that aren't named in your homeowners policy, unless you have an open peril policy. Even then, the insurance company may exclude coverage for some situations so read your declaration page.

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What Is Not Covered By Dwelling Insurance?

Dwelling insurance doesn't cover damages from the following events:

You will have to purchase a separate policy for these perils, which include natural disasters. For instance, if you live in a flood-prone area, you can buy coverage from the National Flood Insurance Program to cover flood damage.

If you live in a quake-prone location, you can get earthquake coverage. Although an HO-3 policy won't cover earthquake-related structural damage, it will pay for fires that result from the quake.

What Is a Dwelling?

A dwelling is a home, whether it be a single-family house, a condominium unit, a townhouse or a multi-family house. In the world of home insurance, most policies cover the structures on your property, which includes the house and other structures, like a detached garage or shed. A condo HO-6 policy typically does not include dwelling coverage if it's a walls-in type of policy.

Why Do You Need Dwelling Coverage Insurance?

Dwelling coverage pays for the rebuilding and repairing costs of your home when a hazard listed in your policy damages it. Dwelling insurance covers not only your home but also other structures on your property, both attached and detached.

Check to make sure these structures are included in your homeowners insurance policy:

  • Your fence
  • Attached Garage
  • Detached garage
  • Deck
  • Patio
  • Built-in appliances (furnace, water heater)
  • Shed
  • Gazebo

How Much Dwelling Coverage Do I Need?

You should have enough dwelling coverage to repair or replace your home and attached structures if a covered hazard destroys them.

Your replacement costs will differ from the price you paid from your home or its current market value. The replacement cost to rebuild your home will include the following factors:

  • Your home's square footage
  • The price of materials
  • Your home's custom features (your roof, flooring, light fixtures, renovations)
  • Your home's style
  • The cost of labor and construction
  • Permits and fees

Dwelling Insurance Limits and Deductibles

Dwelling insurance has limits and deductibles. The limit on your policy is the maximum amount your homeowners insurance policy will pay toward a covered loss. The deductible is the portion you'll pay out of pocket toward a claim your policy covers.

Your dwelling coverage limit affects other coverage limits in your homeowners insurance policy. For instance, your structure's coverage limit is usually about 10% of your dwelling coverage limit.

Most homeowners insurance policies have a minimum of $100,000 in liability coverage, but the average price of dwelling coverage is $300,000 to $500,000. So, if you have a dwelling coverage limit of $500,000, your other structures limit would be $50,000 (10%).

An insurance agent can help adjust your limits and deductible to fit your assets. You can also receive a free quote for home insurance coverage and get paired with a new agent. You could save hundreds of dollars a year by comparing rates.

How Do I Determine Homeowners Insurance Limits?

A professional appraiser can help you determine how much coverage you'll need in your homeowners insurance policy. You can also ask an insurance provider to send an appraiser to your home for an evaluation.

Most homeowners policies include an Insurance Appraisal Clause, which allows you to hire an independent appraiser if you are unsure if the insurance company's estimate is accurate.

How Much Is Dwelling Coverage?

The price you pay for the dwelling coverage portion of your homeowners insurance policy will differ depending on your carrier, your zip code and other factors, so read your policy to make sure it covers these named perils.

What Is HO-6 Dwelling Coverage?

An HO-6 policy is a homeowners policy created for condominium owners. Like traditional homeowners insurance policies, HO-6 policies provide coverage for your unit (not common areas), your personal belongings and liability coverage if someone is hurt in the condo.

The condo association's master insurance policy offers two types of dwelling coverage. Both come with a deductible and are usually set by the association's board of directors:

The All-In (All-Inclusive) Policy

This master policy covers all interior surfaces of the walls, floors and ceiling. It includes the attached fixtures, sinks and toilets. Coverage may not include upgrades to certain fixtures and flooring. You are responsible for insuring your personal belongings, furniture and clothing.

Walls-In Insurance Policy

This master policy only covers the exterior frame of the unit inward but not covering fixtures within the unit. You are responsible for purchasing an HO-6 insurance for the inside of your dwelling, including the walls, belongings and liability coverage.

Compare Rates for Dwelling Coverage, Save on Homeowners Insurance

The best homeowners insurance policies aren't necessarily the most expensive. First, make sure you shop for the proper dwelling coverage to avoid disaster. Second, start comparing homeowners insurance rates for free now. Enter your zip code below.

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