What Is Dwelling Insurance: Coverage For Home

Do you know what is dwelling insurance? Is it the same as home insurance? What does it cover? Relax, take a moment to refresh yourself! Financial institutes always offer their customers various insurance policies such as health insurance, vehicle insurance, and more. There is one more type of insurance termed dwelling insurance that most people are unaware of. So, today, we’ll focus on what is dwelling and how it is calculated. Here, I will also differentiate between homeowners insurance vs dwelling insurance in short. Without wasting much time let us know more about what is dwelling insurance in detail.

What Is Dwelling Insurance?

Dwelling insurance is the part of a homeowner insurance policy that helps in paying for rebuilding or repairing your home. It is often called dwelling coverage. This insurance policy is very useful when your home gets damaged or destroyed due to a covered loss. In short, you can say it pays the cost of damage up to its policy limits.

Now after knowing what is dwelling insurance let’s learn more about it.

What Is Increased Dwelling Coverage?

Increased dwelling coverage is an additional amount allotted by the insurance company. It helps to compensate for a total loss that exceeds the dwelling coverage listed on the insurance policy. Increased dwelling coverage is also known as extended coverage or increased replacement cost.

Keep on reading to know the different types of a dwelling insurance policy.

Dwelling Coverage Types

Just like other insurance policies, you will also find different types in a dwelling insurance policy. Below, you’ll find three common types found under this category.

  • Homeowners Insurance Dwelling Coverage

This policy is referred to as a hazard insurance policy that offers coverage for specific risks. Here, HO-1, HO-2, HO-3, HO-5, and HO-8 policies are included.

  • Condo Insurance Dwelling Coverage

It is an HO-6 policy that covers your property and liability needs such as flooring and built-in appliances.

  • Rental Property Insurance Dwelling Coverage

It is a DP-3 policy that includes dwelling coverage to cover the structure of your rental property.

Let us now find out which damages a standard dwelling home insurance covers.

Damages Covered By Dwelling Insurance

Every insurance policy has certain terms and conditions that help in covering the loss. Below, I have listed down all damages that are covered under the standard dwelling insurance policy.

  • Lightning
  • Fire
  • Volcanic eruption
  • Windstorms
  • Hail 
  • Sleet
  • Smoke
  • Explosion
  • Falling Objects
  • Vandalism
  • Theft
  • Frozen plumbing, heat ducts, or sprinkler application.
  • Water damage due to heating or AC.
  • Damaged caused due to snow, sleet, or ice.
  • Damaged caused due to an aircraft.
  • Damaged caused due to vehicles.

Note: It is always advised to check your own homeowner’s insurance policy to determine what it covers.

Now, let us find out which damages dwelling insurance doesn’t cover.

Damages Not Covered By Dwelling Insurance

Most dwelling insurance excludes certain damages that you might not know. So, below I have listed down some damages that aren’t covered by dwelling home insurance.

  • Flooding
  • Earthquake
  • Sinkholes
  • Sewage backups
  • Service line coverage
  • Improper maintenance of the property.

Unfortunately, you might need to purchase additional coverage for the above damages if you are prone to such damages.

 If you want to know how much dwelling coverage you’ll need, then keep on reading further.

How Do You Calculate Dwelling Coverage?

You can calculate the dwelling coverage of your house by using this formula.

Dwelling Coverage= Square footage of the home X Average local rebuilt cost per square foot.

Generally, your dwelling limit can be 80% of your home’s rebuild value. Below, I have listed down an average annual cost for home coverage with the dwelling policy limits.

Dwelling Coverage LimitAverage Annual Premium
100K$1,159
200K$1,680
300K$2,263
400K$2,863
500K$3,491
600K$4,110

Note: The above values can vary depending upon your credit history, age of your home, and ZIP code.

You can also use an online dwelling coverage calculator which might offer more accurate value. Even hiring a licensed appraiser or contractor is another good option for you.

Dwelling Insurance Vs Homeowners Insurance

By now, we have learned what is dwelling insurance in detail. Let’s now compare it with homeowners insurance.

Dwelling InsuranceHomeowners Insurance
It addresses the coverage needs of landlords who do not live in the insured property.It addresses the coverage needs of homeowners who live in the insured property.
Here, the repair value is below the minimum coverage limit available.Here, the repair value is above the minimum coverage limit available.
The following coverages are included in dwelling insurance policies: Fire, Lightning, Explosion, Smoke, Vandalism, and moreThe following coverages are included in homeowners insurance policies: Dwelling, Personal property, Loss of use, Personal liability, Medical payments to others.

FAQ

What Is The Difference Between Dwelling Insurance And Homeowners Insurance?

The difference between dwelling insurance and homeowners insurance is as follows.

Dwelling InsuranceHomeowners Insurance
It addresses the coverage needs of landlords who do not live in the insured property.It addresses the coverage needs of homeowners who live in the insured property.
Here, the repair value is below the minimum coverage limit available.Here, the repair value is above the minimum coverage limit available.
The following coverages are included in dwelling insurance policies: Fire, Lightning, Explosion, Smoke, Vandalism, and moreThe following coverages are included in homeowners insurance policies: Dwelling, Personal property, Loss of use, Personal liability, Medical payments to others.

What Does The Dwelling Mean?

The dwelling means a house or place where people live.

What Is Homeowners Insurance And How Does It Work?

Homeowners insurance is an insurance policy that provides coverage to repair or rebuild your home after damage. It works according to your premium.

What Is Loss Of Use In Insurance?

In insurance, loss of use can help pay for the additional costs you might incur for reasonable housing and living expenses.

What Is Dwelling Extension Coverage?

Dwelling extension coverage is an additional amount allotted by the insurance company. It helps to compensate for a total loss that exceeds the dwelling coverage listed on the insurance policy.

Conclusion

In my above article, we have studied what is dwelling insurance in detail. Dwelling coverage  is the part of a homeowner insurance policy that helps in paying for rebuilding or repairing your home. This insurance is helpful when your home gets damaged unexpectedly. Usually, it covers damages like Fire, Lightning, Explosion, Smoke, Vandalism, Falling objects, and more. On the other hand, it doesn’t cover damages like Flooding, Earthquakes, Sinkholes, and Sewage backups. So, I advise you to always read your policy documents to know what fits your needs. By understanding what is dwelling insurance, you can easily rebuild your house without hurting your pockets!