What is dwelling coverage?

Dwelling coverage, also known as dwelling insurance or Coverage A, is the part of your homeowners insurance that helps pay to rebuild or repair the physical structure of your house in the event it’s damaged by a covered peril, like a fire, windstorm, or a lightning strike. 

Along with covering the structure of the home, dwelling insurance also covers built-in systems and appliances (like your water heater, HVAC, and plumbing) as well as attached structures (like your garage or porch).

The dwelling coverage limit in your policy should be equal to your home’s replacement cost, or the amount it would cost to completely rebuild your house at the current prices construction and labor. For an accurate rebuild estimate, consider a replacement cost appraisal or use a dwelling coverage calculator.

What does dwelling insurance cover?

Dwelling coverage is the main component of homeowners insurance, covering the physical structure of your home against perils, or hazards, spelled out in your policy. Most homeowners insurance policies cover damage or loss caused by the following perils:

• Fire or lightning

• Windstorms or hail

• Explosions

• Riots

• Damage caused by an aircraft

• Damage caused by a vehicle 

• Power surges

• Smoke

• Vandalism

• Theft

• Falling objects

• Weight of ice, snow, or sleet

• Water damage caused by burst pipes or appliance overflow 

• Frozen plumbing, heating, air conditioning or automatic fire sprinkler systems 

• Volcanic eruptions

If the structure of your home is damaged by any of these perils, file a claim with your insurance company to be reimbursed for the loss. Your home is covered up to the dwelling coverage limit in your policy. To see how much dwelling coverage you have, check your policy declarations page.

What does dwelling insurance not cover?

If the structure of your home is damaged by any of the following disasters or causes of loss, you likely won’t be covered by homeowners insurance. The most commonly excluded perils include: 

• Earthquakes

• Flooding

• Sewer backups

• Sinkholes

• Regular wear and tear

• Damage caused by pests or vermin 

• Intentional loss

• War

It’s also worth pointing out that additional structures on your property — like a detached garage, gazebo, fence, or gardening shed — aren’t protected by dwelling coverage but are covered under the other structures component of your policy. The coverage limit for this portion of your policy is typically 10% of your dwelling coverage limit, so if your dwelling coverage is $300,000, you’d have $30,000 in coverage for any other structures on your property.

Which parts of your home make up the dwelling?

From your insurance company’s perspective, the dwelling consists of:

• The home itself — including your foundation, chimney, and septic tank

• Any built-in appliances — like your HVAC or furnace

• Any other structures attached to your home — like a garage, fence, guest house, or shed

Personal belongings inside the house (like clothing and furniture) and any structures that aren’t directly attached to the home are covered by different sections in your homeowners insurance policy.

How much dwelling coverage do I need?

Your home’s dwelling coverage is determined by the amount it would cost to completely rebuild the house at the current prices of construction and labor. Your dwelling coverage limit should reflect the home’s true replacement cost value. The replacement cost of your home depends on multiple factors, including:

• The cost of construction and labor in your area

• The home’s square footage

• Number of rooms

• Architectural style

• Age of home

• Number of stories

Keep in mind that construction and labor costs can fluctuate, especially in the wake of a natural disaster, so it’s worth considering extended replacement cost dwelling coverage if this option is available through your insurer. This coverage comes at an additional cost, but the coverage benefits make it a worthwhile add-on.

Extended replacement cost works like this: If your home is damaged or destroyed and rebuild costs are higher than the dwelling coverage limit in your policy, your policy limit is automatically increased an additional percentage amount (usually 20–25% of your dwelling limit). 

How much dwelling coverage do I need for a condo?

If you own a condo, the amount of dwelling coverage that you will need in your condo insurance policy will depend on your homeowners association’s (HOA) master policy. The master policy generally covers the building itself, common areas, land surrounding the building, and includes at least some amount of structural coverage for each individual unit. 

To determine how much (if any) dwelling coverage you need in your condo insurance policy, you’ll need to find out if your HOA’s master policy is bare walls, single entity, or all-in coverage.

• Bare walls coverage covers the structure of the condo building and damage to common areas and personal property that belongs to the HOA. This coverage type also usually provides minimal amounts of structural coverage for your condominium unit, protecting everything behind its walls and floors, such as the drywall, insulations, framing, wiring, and plumbing. If your HOA has this type of master policy, you’ll need enough dwelling coverage to replace the entire interior structure of your condo

• Single entity coverage, also known as walls in or studs in coverage, includes all the same building and common area protection as bare walls, but coverage for the interior structure of your unit extends to the outside of the walls, top flooring, cabinets, bathroom fixtures, and any part of the unit that is unaltered as of your move-in date. If your HOA has single entity coverage, you only need enough dwelling coverage to cover unit alterations

• All-in coverage is the most comprehensive type of master policy, covering the entire interior structure of your condo, including unit improvements, alterations, and appliances. If your condo association has an all-in master insurance policy, you likely won’t need to add any amount of dwelling coverage to your personal condo insurance policy