What Is Dwelling Coverage?

Dwelling coverage is the component of home insurance that covers damage to the physical structure of your home. It can also help pay for a hotel and other living expenses in the event a peril makes your home unlivable.

What Is Covered?

Dwelling coverage can include your home’s:

  • Roofing
  • Foundation
  • Floors, framing, windows, and siding
  • HVAC, plumbing, and electrical systems
  • Permanently attached appliances or those you can’t simply unplug and remove (like water heaters, certain stoves or ovens, etc.)
  • Installed fixtures (such as cabinets, showers, etc.)
  • Pools
  • Garage
  • Porch and deck
  • Detached structures like sheds or guest houses can also be covered

Dwelling coverage does not help to repair or replace your belongings. Your possessions would be insured by personal property coverage, a different component of a standard home insurance policy.

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Covered Perils

A peril is an event that causes damage or a loss to your home. The following are some types of perils typically covered by dwelling coverage:

  • Fires
  • Weather
  • Accidents
  • Theft and vandalism

Keep in mind that the exact perils covered by your policy can vary depending on your home insurance company and where you live.

When shopping for home insurance, an easy way to determine what perils are covered is to ask your agent the type of “HO” policy you are being offered. Here is what dwelling coverage includes by HO policy type:

  • HO1:  Covers damage to your home in the event of any of these ten “named,” or specific perils:

    1. Fire and lightning
    2. Wind and hail
    3. Smoke
    4. Volcanic eruptions
    5. Aircraft
    6. Vehicles
    7. Riots
    8. Vandalism
    9. Theft
    10. Explosions
  • H02:  Covers a total of 16 perils (the ten included with HO1, plus six more). These are:

    1. Fire and lightning
    2. Wind and hail
    3. Smoke
    4. Volcanic eruptions
    5. Aircraft
    6. Vehicles
    7. Riots
    8. Vandalism
    9. Theft
    10. Explosions
    11. Falling objects
    12. Freezing
    13. Weight of ice, snow, or sleet
    14. Water or stream overflow
    15. Cracking or bulging
    16. Electric current (artificially generated)
  • HO3: The most popular coverage. It includes detached structures on your property (like garages, sheds, guest houses, etc.). HO3 policies have “open peril” dwelling coverage, meaning all perils are covered, except those listed below:

    1. Earth movement, settling, expanding, and collapse
    2. Mold, fungus, rot, corrosion, smog, industrial smoke, pollution discharge, and nuclear hazards
    3. Neglect, wear and tear, and intentional loss
    4. Power failure
    5. Construction theft
    6. War
    7. Government actions and required structural changes due to ordinance or law
    8. Owned animals, birds, and vermin
    9. Vandalism or frozen pipes if home is left vacant
    10. Defects due to design, construction, or maintenance
  • HO5: Provides the same dwelling coverage as HO3. However, unlike an H03 where your belongings are only covered with named perils, HO5 policies extends “open perils” to your personal property coverage.

  • HO6: Offers coverage similar to an HO3 policy but designed specifically for condos. HO6 policies are often referred to as “walls-in” coverage, where the interior of your condo is insured (since the HOA of your condo will have their own insurance for the structure and common areas).

  • HO8: The least common, where dwelling coverage is tailored to homes that cannot be easily replaced if destroyed (such as older or architecturally/historically significant homes).

Excluded Hazards

Hazards are events that increase the likelihood of a peril happening. In most cases, the following hazards will be excluded in standard dwelling coverage:

  • Floods
  • Earthquakes
  • Sinkholes
  • Mudslides
  • Sewage backups
  • Pest infestations
  • Falling trees caused by pest infestations
  • Routine damage occurring over time

Damage from fire, including wildfires, is typically included in standard dwelling coverage. However, if you live in a fire zone, wildfires may be considered an excluded hazard. In such cases, you would need to purchase a separate fire insurance policy.  

If you live in a flood zone, you can also purchase a separate flood insurance policy. Similarly, if your home is an area prone to earthquakes, you should be able to purchase a separate earthquake insurance policy.

Loss of Use Coverage

If your home is left unlivable due to damage from a covered peril, loss of use coverage can help cover the costs of a hotel or rental while your home is being repaired or rebuilt. Loss of use coverage can also help pay for other living expenses while you are away from home, such as food, mileage, pet boarding, lost wages, and more.

How Much Dwelling Coverage Do I Need?

It is recommended to have enough dwelling coverage to pay for at least 80% of the cost to rebuild your home. The costs should be calculated based off the current value of your structure. If your home was recently remodeled or has high-end finishings, be sure to consider this when deciding your target dwelling coverage amount.

The best way to find the value of your home’s structure is to have it appraised.

If you do not have a current appraisal, but had one in the past, you could get a rough estimate. First, check the document to find the appraised value of your home’s structure vs the land. For instance, let’s say the appraisal lists your home valued at $400,000, with the structure at $300,000 and the land at $100,000. Next, divide the value of your structure by the total value of your home, or in this example, $300,000/$400,000. This will give you the percent your structure represents of your home’s total value, or 0.75 (75%) in this example. Next, check some real estate websites to see the current value of your home. Let’s say your home is now worth $500,000. In this example, you would multiply $500,000 by 0.75, which equals $375,000. This is an estimate of what your structure is now worth.

The above calculation does not account for depreciation or improvements. If you are unable to get an appraisal separately, your home insurance agent should be able to provide an estimate of the value of your home’s structure.

Now that you have learned more about dwelling coverage, shop quotes from top companies with CompareHomeInsuranceQuotes.com!