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What is dwelling insurance?

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A standard homeowners policy is intended for your home, but the policy is typically made up of many disparate parts. If you are shopping around for homeowners insurance or curious about how the policy works, a common question can be this: which coverage actually protects the structure of your home?

That’s where dwelling insurance — sometimes called Coverage A — comes in. If your home gets damaged or destroyed due to a covered loss, such as a fire or storm, this coverage pays the cost of rebuilding and repairing damage up to its policy limits. Having the right dwelling coverage amount, and adjusting it regularly to account for any upgrades, renovations and even inflation, can help ensure you continue to protect what might be one of your largest financial investments.

What dwelling insurance covers

When it comes to homeowners insurance, your policy most likely includes multiple sections of coverage. There is coverage to protect your personal belongings and coverage for the house itself, for example.

To help get a handle on the different coverage types, let’s look at an HO-3 policy, the most common type of homeowners policy. Standard HO-3 policies have six basic components:

  • Coverage to repair or rebuild your house
  • Coverage to repair or rebuild any detached structures on your property
  • Coverage for your personal belongings
  • Liability protection to cover legal fees and expenses if someone is injured or their belongings are accidentally damaged on your property
  • Medical protection to help cover injuries on your property in which you are not legally liable to cover
  • Additional living expenses (also called “loss of use”) to cover your costs of living in a hotel, meal expenses and more while your home is being repaired after a covered loss

So, what is dwelling insurance? It is the first of these six components and is also referred to as “Coverage A” within the policy. In general, it will cover damage from any of these causes:

  • Fire and smoke
  • Lightning strikes
  • Wind damage
  • Hail
  • Explosions
  • Vandalism
  • Theft
  • Damage caused by the weight of snow, sleet or ice
  • Falling objects
  • Damage from an aircraft or auto
  • Volcanic eruption
  • Water damage caused by appliance overflow or heating/AC malfunction
  • Frozen plumbing/heat ducts/sprinkler system/appliance

Check your policy to ensure that it covers these common causes of loss.

If you experience any of these covered losses, your dwelling coverage becomes essential. Dwelling insurance covers damage to your home, including the foundation, frame, walls and roof. It also generally covers things built into your house, like cabinets, air conditioner, furnace and water heater if they are damaged or destroyed by a covered loss like a fire. It also typically covers structures attached to the house, such as an attached garage or porch.

What dwelling insurance does not cover

Not all incidents that can damage your home are covered by homeowners insurance dwelling coverage. This includes:

Flooding

Flood damage is not included in most standard homeowners insurance policies. According to the Insurance Information Institute (Triple-I), 90% of U.S. natural disasters involve flooding so they recommend you consider flood insurance no matter where you live. With changing weather patterns generating more severe storms, areas of our country that have never flooded in the past are more likely to do so now. You may want to consider flood insurance coverage to help cover flood losses should they occur. Flood insurance is available from the National Flood Insurance Program (NFIP) and through select private carriers.

Earthquakes

The top states for earthquakes in the U.S. are Alaska and California, followed by Nevada, Hawaii and Washington. If you live in one of these areas or another part of the country that is liable to damage from earth tremors, you may want to consider adding earthquake coverage to your policy.

Damage from earthquakes can quickly add up. A quake can seriously damage your foundation, and even a minor tremor may cause cracks in walls and extensive property damage. Your HO-3 policy will cover fire damage caused by an earthquake, but structural damage is not covered.

If you live in an area where there is significant oil drilling, such as parts of Oklahoma, seismic activity may also be common and make the need for earthquake insurance more urgent.

Maintenance damage

A home is a complex structure with different systems — plumbing, heating, electrical — all working together to keep you comfortable and safe. It is the homeowner’s responsibility to keep these systems running properly. You need to be vigilant to problems, which could be anything from signs of termite infestation to a wet basement. If you fail to do so and your lack of regular maintenance results in property damage, your dwelling insurance may not cover it.

Sewer backup/Sump pump coverage

Sewer and drain line backup coverage, sometimes called water backup coverage, is a common endorsement to add to homeowners insurance that provides coverage for your dwelling and personal property if they are damaged by a drain line backup. Backup losses commonly happen during heavy rains when a sump pump cannot keep up with the influx of water and overflows, spilling water into a basement or crawlspace. However, it is possible for sewer lines to back up anywhere in a home, including toilets, sinks and floor drains. A water backup endorsement must be added to a homeowners insurance policy to provide coverage for this type of loss.

Backup losses commonly happen during heavy rains when a sump pump cannot keep up with the influx of water and overflows, or stops working because you lost power, resulting in spilling water into a basement or crawlspace. A sump pump endorsement is needed to specifically cover these types of flood losses inside your home.

Service line coverage

Service line coverage protects you against losses relating to the various service lines running into your home. Each property insurer covers different service lines, but commonly covered ones include water and gas lines, internet cables and electrical wires. This is a relatively new coverage in the insurance industry and your particular carrier may not yet offer it. Talk to your insurance professional about the service line coverage options available to you.

How much dwelling coverage do I need?

It may cost more than you realize to rebuild your home if it is destroyed or damaged. Your home’s assessed value is based on what someone might pay for your house on the market, but that number is not the same as your home’s replacement cost coverage (RCC) that is used for your homeowners insurance policy. RCC is the actual cost you would incur to repair or rebuild your house with materials that are similar in kind and quality without deducting for depreciation. Calculating your home’s replacement cost estimate is crucial to figuring out your dwelling coverage amount. First, research what builders are charging in your area per square foot and multiply that by the number of square feet in your house. Then consider details in your home: Does it have hardwood floors? Gumwood trim? Antique light fixtures? A newly-renovated kitchen? Or is it older, with period finishes that might require special attention in the event of a loss? All these influence your RCC value. Also, add in the amount to replace your roof and the value of your exterior finish. Your insurance professional can help you with this process. In fact, most property insurers have a tool that allows insurance agents to calculate this value for you when quoting your homeowners insurance policy.

Your final RCC number may be higher or lower than the market value or assessed value of your home. Your goal with your homeowners insurance coverage is to be able to replace your home with a structure that is similar in size and design or repair it in a way that is consistent with the style of the rest of the house.

Types of dwelling coverage

When it comes to dwelling insurance, there are multiple different policy types. Some apply to homes, while others apply to condos and other property types.

Homeowners insurance dwelling coverage

Virtually all property insurance policies include dwelling coverage, including HO-1, HO-2, HO-3, HO-5 and HO-8 policies. That means that if you are buying home insurance, you are most likely getting dwelling insurance as well.

Some insurers will refer to your home insurance policy as hazard insurance. This is not a separate policy. Hazard insurance is a general term that may be used to mean homeowners insurance. It refers to the coverage for specific risks that you protect yourself against by purchasing your policy. Hazard insurance includes dwelling coverage, other structures coverage and personal property coverage.

Condo insurance dwelling coverage

HO-6 policies protect condominium owners. Here, dwelling coverage is a little complicated. Your HO-6 policy covers your property and liability needs. Your association’s master policy should cover the bulk of the structure itself.

That said, you are responsible for the interior of your condo, and you will need dwelling insurance (which an HO-6 policy can include) to protect it. Often called walls-in coverage, this dwelling insurance can help to repair the parts of your condo for which you are responsible, like your flooring and built-in appliances.

Rental property insurance dwelling coverage

If you own a rental property, it’s important to consider rental property insurance and understand how it works. Also known as a DP-3 policy type, this insurance policy includes dwelling coverage to cover the structure of your rental property in the event of a covered loss but also includes several coverage options not found in a standard HO-3.

Because landlords face different risks compared to homeowners, rental property insurance takes this into account with coverage options like wrongful eviction and loss of use. Additionally, because many cities and states have their own rental laws, it can be worthwhile to speak to a local insurance agent to learn more about rental properties in your area and what additional coverage choices they recommend.

Frequently asked questions

What is the best home insurance company?

It depends on your specific needs, like how much dwelling coverage you require and your budget for home insurance. Getting quotes from some of the best home insurance companies can help you find the right policy for you and your home.

Learn more: Affordable home insurance companies

Does everyone need dwelling coverage?

If you own a home or condo, you should have dwelling coverage. But if you are a renter, you do not need to worry about covering the dwelling. In that case, your landlord is responsible for insuring your structure, and you may want to consider renter’s insurance for your personal belongings.

How do I get the right dwelling coverage?

It is important to calculate how much dwelling coverage you need. Do the math to determine a rough estimate of the cost to rebuild your home with all the materials and finishes you’d want, and discuss that number with your agent, who can use your insurer’s replacement cost tool to check your figure. Make sure you choose enough dwelling coverage to provide you and your family with financial peace of mind.

Do I need dwelling insurance if I rent my home?

As a landlord, renting out your home comes with unique insurance considerations. Rental property insurance comes with special coverage options not found in a standard homeowners insurance policy. Standard homeowners insurance is intended for primary or secondary homes that are owner-occupied. If you rent your home, it may be best to speak to your insurance agent to learn more about dwelling fire insurance (also known as landlord insurance) to ensure you’re financially protected as a landlord.

Written by
Kacie Goff
Personal Finance Contributor
Kacie Goff is a personal finance and insurance writer with over seven years of experience covering personal and commercial coverage options. She writes for Bankrate, The Simple Dollar, NextAdvisor, Varo Money, Coverage, Best Credit Cards and more. She's covered a broad range of policy types — including less-talked-about coverages like wrap insurance and E&O — and she specializes in auto, homeowners and life insurance.
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