You probably have dwelling insurance if you’re a homeowner. It is included in all standard homeowners insurance policies. Some would argue that it is the most important part. In the event of a covered loss, dwelling insurance will help you to pay for repairs or reconstruction of your home and any structures attached to it.
Your dwelling coverage covers the cost of rebuilding and repairing your home if it is damaged or destroyed by an event covered by your home insurance, such as a fire. This coverage is crucial, as your home is probably the most valuable asset you own.
What is the coverage of dwelling insurance?
Your homeowners insurance policy will likely include multiple coverage sections. You can have coverage for your personal items and the house.
Let’s take a look at the HO-3 policy to get an idea of the various coverage types. This is the most popular type of homeowner policy. The four components of standard HO-3 policies are:
- Insurance to cover the cost of repairing or rebuilding your house
- Protection for your personal property
- Liability Protection To cover the cost of injuries or property damage to someone else
- Additional living expenses (also known as “loss of usage”) are used to pay for your living costs while your home is being fixed after a covered loss.
What is dwelling insurance? It is the first component of the four and is often referred to as “Coverage A” in the policy. It will generally cover damages from any of the causes.
- Smoke and fire
- Lightning strikes
- Wind damage
- Snow, sleet and ice can cause damage
- Falling objects
- Auto or aircraft damage
- Volcanic eruption
- Water damage due to appliance overflow or heating/AC failure
- Frozen plumbing/heat ducts/sprinkler system/appliance
These are the most common losses. Make sure you check your policy.
Your dwelling insurance is essential if you suffer any of these losses. Your dwelling insurance covers any damage to your home including walls, roof, foundation, walls, and frame. You can also get coverage for things built into your home, such as cabinets. It will also cover appliances and your furnace, air conditioner and water heater in the event of damage or destruction due to a covered loss, such as a fire. Other structures attached to your house such as a garage, deck, or porch are usually covered.
You will not be covered for structures that aren’t connected to your home, such as a detached garage or driveway, shed, fence, shed, gazebo, or in-ground pool. Additional structures coverage may be available to provide coverage for detached structures that are damaged by covered perils. This coverage generally covers 10% of your dwelling coverage. If your dwelling coverage is $250,000, then your coverage for other structures will be $25,000.
A detached structure such as a garage might not be covered under your dwelling insurance. However, personal property homeowners insurance would cover your items no matter where they are.
What does dwelling insurance not cover?
Homeowners insurance does not cover all disasters. This covers:
Most homeowners policies do not cover flood damage. According to the Insurance Information Institute, Triple-I, 90% of U.S. natural catastrophes are caused by flooding. They recommend that you have flood insurance regardless of where you live. Changes in weather patterns are making it more likely that areas of the country that have not experienced flooding in the past will do so again. To help protect against flood losses, you might consider flood insurance. Flood insurance can be purchased through the National Flood Insurance Program and select private carriers.
California and Alaska are the top states in the U.S. for earthquakes . Nevada, Hawaii, and Washington follow. You might consider adding earthquake coverage to any policy if you reside in these areas or anywhere else that is susceptible to damage from earthquakes.
Earthquakes can cause significant damage. A quake can cause serious damage to your foundation. Even a minor tremor could cause cracks in walls or extensive property damage. While your HO-3 policy covers fire damage from an earthquake, it does not cover structural damage.
Seismic activity can also occur in areas where oil drilling is extensive, like parts of Oklahoma. This makes earthquake insurance even more important.
Your home is complex and has many systems. These systems include heating, plumbing, and electrical. They all work together to keep you safe. These systems must be maintained by the homeowner. It is your responsibility to spot any problems. These could range from termite infestation to a damp basement. Your dwelling insurance might not cover you if you fail to maintain your home properly and cause property damage.
Coverage for sewer backup/sump pump
Water backup coverage is also known as sewer and drain line backup coverage. This endorsement can be added to homeowners insurance and provides protection for your home and personal property in the event of a drain line backup. Backup losses are often caused by heavy rains. A sump pump can’t keep up with the water influx and overflows, leaking water into a basement. It is possible for sewer lines in homes to back up at any time, including floor drains or toilets. To provide protection for this type loss, homeowners insurance policies must include a water backup endorsement.
Backup losses are common during heavy rains. A sump pump can’t keep up with the water influx and overflows or fails to work due to power loss. This causes water to spill into basements or crawlspaces. These flood losses are covered by a sump pump endorsement.
Service line coverage
Your service line coverage covers you for losses related to various service lines that run into your home. Every property insurer covers different services, but the most common ones are water and gas lines and internet cables. This coverage is relatively new in the insurance industry, and your carrier might not offer it. Discuss the options for service line coverage with your insurance professional.
How much dwelling coverage do I need?
If your home is damaged or destroyed, it may be more expensive to rebuild it. The assessed value of your home is determined by what someone would pay for it on the market. However, this number does not reflect replacement costs coverage. RCC refers to the actual cost of repairing or rebuilding your house using materials that are comparable in quality and type, without taking into account depreciation.
There are several steps you can follow to determine the RCC of your home. The first step is to research the average cost of builders in your area per sq. foot. Next, multiply that number by the square footage of your home. Next, consider the details of your home. Does it have hardwood floors or not? Gumwood trim Antique light fixtures? A new kitchen? These all add to the RCC value. Add the cost of replacing your roof and the exterior value. This can be done by your insurance agent. Property insurers often have an online tool that makes it easier to calculate the value.
Some homeowners also choose to add an endorsement for eco-friendly materials to their home. Greener materials are generally more expensive but can result in a lower premium. Talk to your agent if you are planning to rebuild using eco-friendly materials to increase your dwelling coverage.
The final RCC number of your home may be higher than its cash value or assessed value, but it is still important to have this information in order to review your policy with an insurance professional and make any necessary updates. You want to be able either to replace your home with one that is comparable in size or design, or to repair it in a manner that matches the style of the rest.
Talk to your agent about functional replacement costs if your home has period finishes or is older. The endorsement will reduce your dwelling amount, which could lead to a lower premium. Any period finishes will be replaced by modern building materials. In the event of a covered loss, plaster walls that are insured on a functional cost basis will be replaced with drywall.
A second reason to ensure adequate dwelling coverage is that contractors may be stretched thin after a disaster that affects multiple homes in an area, such as a hurricane and a wildfire. It may cost more to rebuild your home than you would expect. To ensure financial protection in the event that a major loss occurs, you should purchase as much dwelling insurance as you can afford.
These are the factors that will affect how much you need to insure your home.
- Costs to rebuild your house
- Types of materials that you would like to use in your reconstruction
- It is possible that your home will need to be rebuilt simultaneously with other homes in your neighborhood.
- How important do you place eco-friendliness?
Types of coverage for your home
There are many different types of dwelling insurance. Some are for homes while others can be used to condos.
Homeowners insurance dwelling coverage
Nearly all property insurance policies cover dwelling coverage. This includes HO-1, 2 and 3 policies, as well as HO-5 policies and HO-8 policies. This means that you will most likely get dwelling insurance if you purchase home insurance.
Insurers may refer to your home insurance as hazard insurance. This policy is not separate. The term “hazard insurance” can also be used to refer to homeowners insurance. This refers to your insurance policy’s coverage for certain risks. The coverage for hazards includes coverage for dwellings, personal property and coverage for other structures.
Condo insurance dwelling coverage
HO-6 policies protect condominium owners. This is where dwelling coverage can be a bit complicated. Your property and liability coverage is covered by your HO-6 policy. The bulk of the structure should be covered by the master policy.
You are responsible for the interior and exterior of your condo. To protect it, you will need dwelling insurance, which an HO-6 policy may include. This insurance, also known as walls-in coverage can be used to cover the areas of your condo that you are responsible for, such as your flooring or built-in appliances.
Renters insurance dwelling coverage
Renters dwelling coverage doesn’t exist. HO-4 policies provide renters coverage for personal property and liability as well as additional living costs. However, dwelling coverage is not available. Your landlord’s policy insures the building structure when you rent.
Questions frequently asked
Which is the best company for home insurance?
It all depends on what you need, such as how much coverage you need and your budget. You can get quotes from the top home insurance companies to help you choose the right policy for your home.
Does everyone need dwelling coverage?
You should have dwelling coverage if you own a condo or home. Renters don’t need to worry about this. Your landlord will insure your property.
How can I get the best dwelling policy?
It is crucial to determine how much coverage you require for your dwelling. Calculate the cost of rebuilding your home using all materials and finishes. Talk to your agent about the numbers. Your agent can then use the replacement cost tool provided by your insurer to verify your figures. You should ensure that you have enough coverage for your dwelling to protect you and your family.