Dwelling coverage is a key part of your homeowners insurance policy that protects the physical structure of your home, and anything permanently attached to it, like a garage or a deck. Also known as Coverage A, this coverage is crucial for repairing or rebuilding your home after it sustains damage by a covered event, such as a fire or a windstorm.
Understanding dwelling coverage is important for all homeowners. This guide will explain what dwelling coverage protects, what it typically doesn’t cover, and how it fits within your overall homeowners insurance policy.
What is Dwelling Coverage for Homeowners and What Does it Cover?
A standard homeowners insurance policy is made up of several types of coverage, each offering a different form of protection. Of these, dwelling coverage is arguably the most essential. It helps you repair damage to your home’s physical structure or rebuild it entirely if it’s destroyed in a major incident.
Dwelling coverage applies to your home’s primary components, including the roof, foundation, walls, floors, doors, and built-in appliances. It also extends to any structures permanently attached to the house, such as a garage, porch, or deck. It’s important to remember that this coverage is for the building itself and does not protect your personal belongings or separate, unattached structures like a gazebo or a shed.
While specific covered events, or “perils,” can vary by location and policy, dwelling coverage on a standard homeowners policy typically protects against:
- Fire and smoke
- Lightning strikes
- Wind and hail
- Vandalism
- Damage caused by weight of snow or ice
- Explosions
- Falling objects
Even though these hazards are commonly covered, you should always review your specific policy documents to confirm what is and isn’t included.
Does Condo Insurance Include Dwelling Coverage?
Yes, standard condo insurance policies include dwelling coverage, but it works a bit differently than it does for a single-family home. Since most condo owners only own the interior of their unit and not the entire building, their dwelling coverage is more limited.
For a condo, your dwelling coverage typically protects the interior of your unit, including built-in cabinets, flooring, appliances, and other fixtures. The building’s exterior—such as the roof, foundation, and exterior walls—is usually covered by your condo association’s master insurance policy.
What your individual dwelling policy covers will depend on the specifics of the building’s master policy. It’s crucial to understand what the association’s policy includes to avoid gaps in your coverage.
What Does Dwelling Insurance Not Cover?
While dwelling coverage is essential, it’s equally important to know its limitations. Standard policies do not cover every type of disaster. Here are a few common perils that are typically excluded, which may require you to purchase additional coverage for full protection:
- Flooding: Although your policy may cover damage from windstorms or hail, it will not cover water damage caused by flooding. If your home is in an area at risk of flooding, you will need to purchase a separate flood insurance policy.
- Earthquakes: Similarly, most homeowners and condo policies will not cover damage caused by “earth movement,” such as earthquakes, landslides, or sinkholes. It is possible to purchase add-on coverage for these types of disasters.
- Lack of maintenance: Although your insurance policy will cover repairs after a sudden, covered event, it will not help with damage resulting from regular wear and tear, neglect, or a lack of maintenance.
- Water backup: Typical homeowners insurance policies will not cover damage from a backed-up sewer line, drain, or sump pump overflows. Water backup coverage is available as an add-on for most homeowners insurance policies.
- Infestations: Pest infestations can cause major damage to your home, but this damage is not covered by your dwelling coverage. Most insurers consider this as a maintenance issue, so homeowners are expected to pay for these issues themselves.
How Much Dwelling Insurance Do I Need?
Your dwelling coverage is subject to a policy limit, which should be high enough to completely rebuild your home if it’s destroyed by a covered event.
To determine this amount, your insurance provider will ask you several questions about your home’s features, such as its age, square footage, roof type, flooring, and the number of rooms. This information helps to calculate the replacement cost value—the estimated cost to rebuild your home from the ground up. This value is often different from your home’s current market price.
Because rebuilding costs can change over time due to inflation, material shortages, or other economic factors, it’s important to periodically review your dwelling coverage with your insurer. This ensures your home remains fully protected as costs fluctuate.
Your dwelling coverage limit is also used to determine the limits for other types of coverage on your homeowners insurance policy. For example, your personal property coverage limit is often set as a percentage (typically 50% to 70%) of your dwelling coverage amount. We recommend creating a home inventory to track your possessions; this will help you determine if the standard amount of coverage is sufficient for all your belongings.
Can I Increase My Dwelling Coverage Limits?
Yes, there are several ways to add higher limits to your dwelling insurance for extra protection.
One option is extended replacement cost coverage, an endorsement you can add to your policy that raises your dwelling limit by a predetermined percentage (typically 20% to 50%). This can provide a crucial boost to your coverage if rebuilding costs increase significantly after a major event, such as a widespread natural disaster.
For even greater peace of mind, some companies offer a guaranteed replacement cost policy. This type of policy will cover all costs to rebuild your home to its pre-loss condition, regardless of the expense. However, this coverage is not widely available, so you may have limited options.
AIS Is Here to Help
Purchasing a home is one of life’s major investments. Understanding dwelling coverage is a key step in protecting your home and assets. By knowing what your policy covers and what it doesn’t, you can ensure you have the right protection in place. If you have any questions or need help choosing a policy that best fits your needs, AIS is here to help. Our insurance specialists can guide you through your options and help you build a policy that is right for you. To learn more, click here or give us a call today at (888) 772-4247.
This content is offered for educational purposes only and does not represent contractual agreements. It should not replace manuals or instructions or the advice of a qualified professional. The definitions, terms and coverage in a given policy may be different than those suggested here. Such policy will be governed by the language contained therein.
