Dwelling Coverage

Dwelling coverage, labeled Coverage A on a homeowners policy, pays for physical damage to the structure of your home: the walls, roof, foundation, floors, ceilings, built-in appliances, heating and cooling systems, electrical and plumbing, and your attached garage. It is the core coverage on any homeowners or landlord policy and the largest limit on most declarations pages.

The most important thing to understand about dwelling coverage is that the limit should be set based on the cost to rebuild your home from the ground up, not on its market value. These two numbers can differ significantly. In a strong housing market, a home might sell for $750,000 while the actual cost to rebuild it -- labor, materials, foundation work, permits -- is only $480,000. The land value is included in the sale price but is irrelevant to insurance because land cannot be destroyed by fire or wind. Carrying $750,000 in dwelling coverage when the rebuild cost is $480,000 wastes premium without adding protection.

Rebuild costs have risen substantially since 2020 due to labor shortages, supply chain disruptions, and sustained inflation in construction materials. If your dwelling limit has not been reviewed in three or more years, it may have fallen behind what an actual rebuild would cost today. Carriers offer no-cost rebuild cost estimating tools, and a licensed agent can run one at any time. Discovering an underinsurance gap before a loss costs nothing. Discovering it after a total loss can mean tens of thousands of dollars out of pocket beyond your deductible.