What Is Dwelling Coverage Within Homeowners Insurance?

Dwelling coverage, referred to in homeowners insurance policies as Coverage A, assists in repairing or rebuilding the physical structure of your home if it is damaged or destroyed by a covered risk. This coverage includes both the structural components of your home, such as your roof, garage, windows, floors, and walls, as well as items that are related to and deemed integral to your homes, such as your air conditioner and plumbing system.

Dwelling home insurance is available in two forms: replacement cost coverage, which is the cost of totally rebuilding your home to its pre-damage condition, and market value coverage, which is the cost of rebuilding your home to its pre-damage market worth.

Let's examine all you need to know about dwelling coverage, including a breakdown of coverages, the amount of coverage you require, and other critical details that will help you become comfortable with one of the most critical components of your home insurance policy.

What Is Covered By Dwelling Insurance?

Dwelling insurance, commonly known as Coverage A in a homeowner's insurance policy, assists in repairing or rebuilding your home and its contents following damage or destruction caused by a covered risk.

While most people think of their home's more significant components like the roof and foundation, dwelling coverage also protects your home's major systems, such as the electrical and plumbing. Additionally, it safeguards critical items considered to be built into your homes, such as your air conditioning, water heater, and wood fire.

Dwelling coverage can kick in, covering the cost of repairing or rebuilding your home if it is damaged or ruined by one of the 16 named perils, which include natural disasters such as hurricanes and tornadoes, as well as manufactured disasters such as house fires, water damage, burglary, and vandalism.

However, it must have occurred suddenly and unexpectedly for the damage to be covered. Therefore, if you're cooking and accidentally start a kitchen fire that burns down half the kitchen — or, worse, the entire house — it's likely that this would be ruled an accident. In that instance, your dwelling coverage would assist you in re-establishing an everyday life by paying for the repair or rebuilding of your kitchen or the entire home.

Suppose a hurricane rips through on the other end of the coverage spectrum, ripping a section of your roof and siding off your home. Additionally, you would be protected from that harm if it occurred suddenly and unexpectedly.

Your homeowners' insurance dwelling coverage would therefore cover the cost of repairing or replacing your roof and siding. It's critical to understand that dwelling coverage applies only to items considered part of your house's structure and that the risks covered by your insurance policy are limited. Consider some of the points that are omitted.

What Is Not Covered By Dwelling Insurance?

Things linked to your house but not deemed part of it are not covered by homeowners insurance. Thus, antennae, satellite dishes, and fences are not covered under the dwelling section of your house insurance policy, even though they are connected to your home.

Coverage for those items may be included under your policy's other structures section, which is intended to cover structures on your property that are not related to or recognized as a significant element of your home.

Additionally, only some hazards are covered. Therefore, it is critical to understand that Coverage A does not protect your home from catastrophic natural catastrophes such as floods and earthquakes. You'll need separate flood insurance and earthquake insurance if you reside in an earthquake-prone area.

Additionally, your policy's dwelling coverage excludes damage caused by regular wear and tear and problems caused by negligence, such as dry rot, termite damage, or mold.

You may also be uninsured against sinkhole damage depending on where you live. Although Floridians who encounter sinkhole activity on their property that damages a significant piece of their home may be partially or entirely covered by their insurance in certain circumstances. It is always prudent to check with your insurance agent to determine what is not covered by your policy.

The residential section of coverage A does not protect your personal belongings regarding objects on your property. For example, lawnmowers and tools, interior and outdoor furnishings, clothing, and electronics are all considered personal possessions and so covered under the Coverage C component of your insurance.

How Much Coverage Do I Need for My Dwelling?

Your dwelling coverage must equal or surpass the cost of entirely rebuilding your home. If your home is worth $200,000, you must carry at least that amount in residence insurance. If your home is worth $400,000, you must have at least that amount in residence insurance.

Assume the value of your home is $200,000. If you have only $150,000 in dwelling coverage and your home is destroyed, insurance will only cover the cost of rebuilding your home up to that amount. If the rebuilding expenses are $200,000, the remaining $50,000 will come directly from your wallet. That is why it is critical to have enough home coverage.

Given the constant rise in house values, it's always a good idea to carry at least 5% more dwelling coverage than your home's current value. Therefore, a homeowner who owns a $200,000 home may wish to purchase $210,000 in dwelling coverage to be secure.

Each person requires a different amount of housing coverage, which is determined by the value of their home. Obtaining sufficient coverage is unlikely to be a problem, as many insurers require insurance to value on the dwelling section of their policy.

Additionally, suppose you still owe money on your home's mortgage. In that case, your lender will compel you to obtain and maintain proper homeowners insurance for as long as you owe money on your mortgage. If you own your home outright, homeowners insurance is not needed by law, but we strongly advise you to maintain coverage.