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What Is Dwelling Coverage in Homeowners Insurance?

By Jarrod Heil

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Dwelling coverage, which is known as Coverage A in home insurance policies, helps protect the physical structure of your home (including things like your roof, windows, flooring and walls) if it’s damaged or destroyed by a covered peril.

Dwelling insurance coverage extends beyond its definition of a place a person lives in and expands into many facets of your home that you’ve worked hard to achieve, build and enjoy. It’s one of the most important parts of a homeowners insurance policy and understanding its coverage and how it works is crucial to your home’s protection.

It helps protect your home and finances, but it does so much more for your livelihood and peace of mind. Let’s take a look at what is dwelling coverage, how much you need and many more important facets that help to familiarize you with one of the most important coverages in your home insurance policy!

What Is Dwelling Coverage?

Dwelling coverage within a homeowners insurance policy helps pay to repair or rebuild your home if it has been damaged or destroyed by a covered peril. It covers everything that’s considered a physical structure, including your roof, floors, walls, windows and much more.

The most commonly covered perils in dwelling insurance coverage claims are vandalism, fire or smoke damage and damage from lightning, windstorms and hail, but there are many more covered perils under each homeowners insurance policy.
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How Much Dwelling Coverage Do I Need?

Every person needs a different amount of dwelling coverage because it’s based on the value of your home. If your home is worth $200,000, you need to have a minimum of $200,000 in dwelling insurance coverage. If you have a $400,000 home, you’ll need to have at least $400,000 worth of dwelling insurance coverage.

You need the dwelling insurance portion to match or exceed the amount it would cost to completely rebuild your home. If you have $100,000 in dwelling coverage and your home is destroyed, insurance will only pay $100,000 to rebuild your home. If the cost to rebuild costs $150,000, the remaining $50,000 would come directly out of your pocket. That’s why having adequate dwelling coverage is vital.
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Dwelling Replacement Cost Coverage vs. Market Value Coverage

Within your dwelling coverage policy, each policyholder may choose to insure their home with replacement cost coverage or market value coverage. Each proactively protects your home from covered perils, but each has its definitions of coverage. Let’s take a look at each.

Dwelling Replacement Cost Coverage

Dwelling replacement cost coverage is the most straightforward option of Coverage A. If your home is destroyed, it pays the entire amount it costs to rebuild your home, whether that amount is above or below your home’s actual value, up to your policy maximum. This coverage often costs more than market value coverage.

Dwelling Market Value Coverage

Dwelling market value coverage insures your home up to its market value before it was destroyed. So even if you have $200,000 of market value dwelling coverage on a $200,000 home that gets destroyed and it costs $220,000 to rebuild, you’d be stuck paying the remaining $20,000 out of your pocket.

To get an accurate representation of how much it would cost to rebuild your home, consult a local contractor or home builder to conduct an inspection. They’ll be able to factor in any values that may increase the rebuild price, such as custom-built floors or windows, local construction and labor costs and many more things that people outside the industry typically don’t think about.
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Dwelling vs Personal Property

Dwelling coverage protects your physical home structure and many things connected to it, including a garage and porch, windows, doors, roof, chimney, fireplace, carpets, floors and so on. There are a few things that typically aren’t covered, but we’ll get to those in a little bit.

Since your home’s dwelling coverage applies to the physical structure of your home, it only relates to personal property that’s built into its structure, like a built-in bookcase and cabinets. It doesn’t apply to things like a mounted TV, surround sound system or furniture because those items would fall under your policy’s personal property coverage.
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What Does Dwelling Protection Not Cover?

Antennas, satellite dishes and fences are not covered by the dwelling portion of your home insurance policy, even if they are connected to your home. They’re considered other structures and are protected by the Coverage B portion of your policy.

Coverage A doesn’t protect against floods, earthquakes, sinkholes, normal wear and tear and problems that have been caused by negligence, such as dry rot and mold situations.

In terms of things located on your property, many items aren’t covered by your Coverage A dwelling portion. For instance, sheds or treehouses in the backyard, lawnmowers and tools, interior and exterior furniture, clothing, electronics and so much more are not covered by the dwelling portion of your home insurance.

But fear not my friends, there are five more portions of your coverage that cover those items and more! You can read about everything that’s covered and not covered in your home insurance policy by clicking the article links below: