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What is dwelling coverage & how much do you need?

Dwelling coverage (coverage A) is the portion of your homeowners insurance policy that pays to repair the physical structure of your home. How much dwelling coverage you need depends on the replacement cost of your home.

Pat Howard 1600

By

Pat Howard

Pat Howard

Senior Editor & Licensed Home Insurance Expert

Pat Howard is a senior editor and licensed home insurance agent at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

Updated|4 min read

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What is dwelling coverage?

Dwelling coverage is the part of your homeowners insurance policy that protects the physical structure of your home from covered hazards like burning to the ground, getting destroyed by a hurricane, or being crushed by a fallen tree. It'll pay to rebuild your home, making it one of the most important and expensive parts of your policy.

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What parts of my home are protected by dwelling insurance?

Dwelling coverage protects the following parts of your home:

Personal belongings inside your home and any structures that aren’t directly attached to your home are covered by other sections of your homeowners insurance policy.

What is covered by dwelling insurance?

Dwelling insurance covers your home and built-in systems from the following perils (aka hazards), according to the Insurance Information Institute: [1]

If the structure of your home is damaged by any of these perils, you can file a claim with your insurance company to be reimbursed for the damage — up to the dwelling coverage limit in your policy.

What is not covered by dwelling insurance?

Dwelling insurance doesn’t cover your home against all perils. Here are a few policy exclusions not covered by dwelling insurance: 

Consider purchasing coverage add-ons to ensure you're fully protected

Many home insurance companies offer coverage add-ons — also called endorsements — that you can add on to your policy for an additional annual fee to protect you from some of these exclusions listed above. A few you might want to seriously consider include flood insurance, earthquake insurance, and water backup coverage.

Here's why.

Over 1 in 4 flood insurance claims are filed by people who don't live in high-risk flood zones, according to FEMA. [2] And the National Flood Services estimates that just one inch of flood water can cause $25,000 in damage. [3]

Meanwhile, as many as half of all Americans are exposed to a potentially dangerous earthquake, and that number is likely higher in earthquake-prone states like California, Nevada, and Oregon, according to data from the U.S. Geological Survey. [4]

How much does dwelling coverage cost?

Dwelling coverage makes up the bulk of your home insurance policy since it covers the largest structure — your home — making it one of the most expensive coverages. In general, the more dwelling coverage you have, the higher your home insurance rates will be. 

Let’s take a look at the average cost of homeowners insurance in the U.S. based on different dwelling coverage limits, according to our analysis of 2022 rates from across the country.

Dwelling converge limitAverage annual cost
$100,000$946
$200,000$1,442
$300,000$1,899
$400,000$2,481
$500,000$3,066

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How much dwelling coverage do I need?

How much dwelling coverage you need depends on the replacement cost of your home — or how much it would cost to rebuild it at today’s construction and labor prices. 

It should not be based on your home’s market value, which is how much buyers are willing to pay for it on the real estate market.

Let’s take a look at an example.

Say there was a bidding war on the home you just purchased due to the hot real estate market. While the rebuild cost of the home is only $300,000 — you ended up paying $450,000 to beat out other potential buyers.

You would still only need $300,000 in dwelling coverage to fully protect your home — even though you paid $150,000 more when you bought it. 

What factors affect the replacement cost of my home?

The replacement cost of your home depends on multiple factors, including:

  • The cost of construction and labor in your area

  • Your home’s square footage

  • Age of your home

  • Number of rooms

  • Architectural style

  • Number of stories

  • Recent renovations

  • Special features in your home

You can use our replacement cost estimator to help you calculate how much coverage you need. But we’ll also show you a quick way to guesstimate it below.

How to calculate dwelling coverage

A quick way to calculate dwelling coverage for your home is to multiply the square footage of your home by the average cost per square foot to build in your area.

Because construction and labor costs can fluctuate — especially in today’s economy — you might want to purchase one of the following extended dwelling coverages to ensure you’re fully protected:

How do claims work with dwelling coverage?

If the structure of your home is damaged by a covered event, you can file a dwelling coverage claim through your home insurance company to get reimbursed for the damages. 

Most insurance companies allow you to file a claim online or over the phone. You’ll typically need to provide documentation of the damage, and then your insurer will send an adjuster to your home to assess the situation and calculate a settlement amount.

Your claim payout amount will be subject to your home insurance deductible, which is the out-of-pocket amount you’re responsible for paying before insurance kicks in to cover the rest. Most deductibles range anywhere from $500 to $2,000. 

Is dwelling coverage required?

While dwelling coverage is not required by law, most mortgage lenders require you to purchase homeowners insurance (including dwelling coverage) before they’ll extend you a loan. This is because they have a financial stake in your property until you fully pay off your mortgage, so they want to ensure their investment is fully protected.

Types of dwelling coverage

In this article, we focused on dwelling coverage for HO-3 home insurance policies — the most common type of home insurance that the majority of Americans have. But there are a few key differences in how dwelling coverage works for other types of policies.

Type of policyWho it's forHow dwelling coverage works
HO-1 policyHomeownersProtects your home against 10 named perils listed in your policy at its actual cash value
HO-2 policyHomeownersProtects your home against 16 named perils listed in your policy at its replacement cost value
HO-3 policyHomeownersProtects your home against all risks except those exclusions listed in your policy at its replacement cost value
HO-4 policyRentersDoesn't include dwelling coverage — that's your landlord's reponsibility with a rental property insurance policy
HO-5 policyHomeownersProtects your home against all risks except those exclusions listed in your policy at its replacement cost value
HO-6 policyCondo ownersProtects your condo against all risks except those exclusions listed in your policy at its replacement cost value; how much you need depends on your condo building's master policy
HO-7 policyHomeowners with mobile homesProtects your mobile or manufactured home; whether your policy is all risks or named perils, and actual cash value or replacement cost value varies by company
HO-8 policyHomeowners with older high-risk homesProtects your home against 10 named perils listed in your policy at its actual cash value

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Frequently asked questions

What is dwelling coverage vs. homeowners insurance?

Dwelling coverage is a portion of your home insurance policy. When you buy homeowners insurance, you’re not only insuring the home itself (your dwelling), but you’re also purchasing coverage for your personal belongings, personal liability, and additional living expenses if a disaster forces you from your home.

How do I know how much dwelling coverage I have?

You can check your homeowners insurance declaration page to find out how much dwelling coverage you have. Also called a dec page, this is a 1- to 2-page document you should have received when you first purchased your policy that summarizes your coverage limits, annual premium, deductible, and contact information. If you can’t find it, your insurance company will be able to provide you with a new copy.

What is coverage A in home insurance?

Coverage A is the official term for the dwelling coverage portion of your homeowners insurance policy.

How much dwelling coverage do I need for a condo?

The amount of dwelling coverage you need for your condo depends 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. You can learn more with our guide to condo insurance.