What Is Dwelling Coverage?

Dwelling coverage, which is known as Coverage A in homeowners insurance policies, helps to repair or rebuild the physical structure of your home if it’s damaged or destroyed by a covered peril.

Let’s take a look at everything you need to know about dwelling coverage, including a breakdown the coverage, how much you need and more to familiarize you with one of the most important coverages in your home insurance policy.

If you’re wondering what dwelling coverage means, here’s a definition. Dwelling coverage refers to the part of your policy that protects the physical structure of your home.

This coverage extends to things that make up your house, like your roof, garage, windows, flooring, and walls, as well as things that are attached to and considered a vital part of your home, such as your air conditioning, water heater, plumbing system, and much more.

The dwelling meaning in insurance is the physical structure of your home. So, the place you dwell is your dwelling.

Some companies have restrictions on what’s covered, like a detached garage you converted into a guest house or the shed in your yard that doubles as your home office. The dwelling simply refers to the primary residence itself.

Homeowners insurance coverage for your dwelling helps pay to repair or rebuild your home and its components if they’ve been damaged or destroyed by a covered peril.

While many people may think of the larger parts of their home, such as your roof and foundation, dwelling policy coverages also protect the major systems in your home, such as your electrical and plumbing. It also protects vital things that are considered to be built into your house, such as your air conditioning and water heater.

When dwelling coverage goes into effect, it can pay to repair or rebuild your house if it’s damaged or destroyed by one of the 16 named perils, These include natural disasters like hurricanes and tornadoes, as well as events like house fires, water damage, and burglary.

However, to be covered, the damage had to have occurred suddenly and unexpectedly. So if you’re cooking and accidentally start a kitchen fire that burns up half the kitchen — or worse, the entire house — that would likely be considered an accident. Kitchen fires are the leading cause of home fires, so this may be a more likely scenario than you think.

In that case, damage from the fire, which is considered a dwelling coverage, would be cause for you to invoke your policy. Your policy can then help get your life back on track by paying to repair or rebuild your kitchen or your entire house.

Yes, dwelling coverage does include your roof on the primary dwelling residence. That means your roof is covered if it’s damaged suddenly or accidentally by a covered peril on your policy. 

Let’s continue the example from earlier. While accidental kitchen fires may be covered by your dwelling coverage, on the other side of the coverage spectrum, let’s say a hurricane comes rolling through, ripping off part of your roof and your home’s siding. You’d also be covered for that damage because it happened suddenly and unexpectedly.

Your Coverage A dwelling policy would then pay to repair your roof and siding or put an entirely new roof and siding onto your house. It’s imperative to know that this coverage only applies to the things that are considered to be a part of your home’s structure, and the perils are limited by your insurance coverage. Let’s look at some things that aren’t covered.

Things that are connected to your house, but that aren’t considered a part of your house, won’t be covered by homeowners insurance. So antennas, satellite dishes and fences aren’t part of your dwelling property coverage because, even though they may be connected to your home, they’re not necessary to it.

Coverage for those items may fall under your policy’s other structures coverage, which is designed to provide coverage for structures on your property that aren’t connected to or aren’t deemed to be a vital part of your house.

Only certain perils are covered as well. So it’s important to know that Coverage A doesn’t protect your house against major natural disasters like floods and earthquakes. To protect your house against damages from them, you’d need separate policies for flood insurance and, if you live in an area prone to earthquakes, earthquake insurance.

Your house insurance dwelling coverage also doesn’t protect your home from damages caused by normal wear and tear and problems that have been caused by negligence, such as dry rot, termite damage or mold situations.

Depending on where you live, you’re probably not covered from damage caused by sinkholes, either. Although Floridians who experience sinkhole activity on their property that destroys a large portion of their home may be partially or fully covered by their dwelling protection in some situations, it’s always best to check with your insurance agent to see what is and isn’t covered.

In terms of things located on your property, your personal items aren’t covered by your Coverage A. For instance, things like lawnmowers and tools, interior and exterior furniture, clothing, and electronics would be considered personal belongings and, therefore, would be covered under the Coverage C portion of your policy.

You need your dwelling limit on insurance to match or exceed the amount it would cost to completely rebuild your home. If your home is worth $200,000, you need to have a minimum of $200,000 in dwelling. If your home is worth $400,000, you need to have at least $400,000 in coverage.

Let’s say your house is worth $200,000. If you only have $150,000 in Coverage A and your home is destroyed, insurance will only pay $150,000 to rebuild your home. If the cost to rebuild is $200,000, the remaining $50,000 would come directly out of your pocket. That’s why having adequate dwelling coverage is vital.

Since home prices continuously go up, it’s always a smart idea to have at least 5% more in your homeowners insurance dwelling coverage amount than your home’s current value. So a homeowner with a $200,000 house may want to invest in $210,000 of dwelling coverage to be safe.

Every person needs a different amount of property insurance and dwelling coverage, based on the value of your house. Getting enough coverage probably won’t be too difficult because many insurers require insurance to value on the dwelling portion of their policy.

Plus, if you still owe a mortgage on your home, your lender will require you to purchase and show proof of adequate homeowners insurance as long as you owe money on your mortgage. If you own your house outright, you aren’t required by law to have homeowners insurance, but we highly recommend keeping coverage.

It’s easy to define dwelling coverage, but there’s much more to it than the definition. Within this coverage, 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 own definitions and stipulations for coverage. Let’s take a look at each.

Dwelling replacement cost coverage is the most straightforward option of Coverage A. If your home is destroyed by a covered peril, replacement cost coverage will pay 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.

Replacement cost on dwelling coverage is the more comprehensive protection of the two, as it covers the entire replacement cost of the home if it were damaged or destroyed, without factoring in the value of the land it sits on. This coverage is recommended and often costs more than market value coverage.

Market value dwelling policies cover your home up to its market value before it was destroyed. So there’s a chance the market value of your home is lower than the amount it would take to rebuild it. If you have $200,000 of market value dwelling coverage on a $200,000 home that gets destroyed and costs $220,000 to rebuild, you’d be stuck paying the remaining $20,000 out of your pocket.

To get an accurate representation of your dwelling 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, like how inflation may alter these costs.

If you’re wondering what is dwelling extension coverage, also called extended replacement cost, is additional protection that factors in appreciation. It’s usually 125% to 150% of your home’s actual replacement cost. So if you’re conducting a home insurance review yearly like you should, adding extended dwelling property insurance is a surefire way to ensure your house is protected if it gets destroyed.

You may be wondering what is increased dwelling protection, as this term may be used on your policy instead of extended dwelling coverage. These terms indicate extra dwelling protection, meaning you’ll be covered for more than your home’s actual value. These terms are used interchangeably, both referring to a safety net of extra dwelling coverage. 

Knowing the difference between homeowners insurance vs. dwelling insurance is vital to understanding your policy. In short, homeowners insurance refers to your entire policy, while dwelling is one of your policy’s parts. 

On home insurance, the dwelling coverage definition is the part of your policy that covers the makeup of your home. However, there are plenty of other aspects to your home, like your belongings and the other structures on your property. 

However, there is such a thing as dwelling insurance policies, which are typically used for landlord insurance or vacant home insurance. They might sometimes be called dwelling fire insurance. These policies, also known as DP-1, DP-2, or DP-3, provide respectively increasing coverage for homes not considered one’s primary residents. 

While we’ve covered how to define dwelling insurance, there’s a lot more to know about your homeowners insurance policy as a whole. You can read about everything that’s covered and not covered in your home insurance policy by clicking the article links below: