There are four components to homeowners insurance: dwelling coverage, personal property coverage, personal liability coverage, and additional living expenses coverage.
Dwelling coverage is probably the most well-known feature of homeowners insurance. If something happens to your home, you can have it repaired or rebuilt as long as your particular policy covers the peril that caused the damage.
What is dwelling coverage?
Dwelling coverage is the part of a homeowners insurance policy that can help cover the cost to repair or rebuild your home if it is damaged.
In insurance terms, your dwelling consists of your home and any other structures on the property, like an attached garage or porch. The scope of your dwelling coverage depends on the type of homeowners insurance policy you have and whether it covers named perils or open perils.
Condo and renters insurance do not include dwelling coverage
If you purchased a condo, the association owns the building and common areas. Therefore, dwelling coverage for a condo/co-op is through the condo association’s master policy. Condo insurance insures your unit and belongings inside your unit.
If you are a renter, you do not own the building or house. Therefore, it is the landlord’s responsibility to insure the dwelling. Renters insurance only protects your belongings.
What does dwelling coverage protect?
Main structure of your home
The floor, ceiling, windows, walls, and foundation of your home are covered by dwelling coverage. What’s in the home and the land it sits on are excluded.
Attached structures
Attached structures, such as garages, are typically included in dwelling coverage. An unattached structure, such as a shed or greenhouse, may be covered under a separate section of your policy called other structures coverage.
Built-in appliances
Some appliances, such as a water heater, are built into your home and cannot be removed (except if they need to be replaced). These types of appliances are usually protected under dwelling coverage, whereas an appliance that plugs into the wall, such as a refrigerator, would be considered personal property.
Perils covered by dwelling coverage
Dwelling coverage varies based on your homeowners insurance policy and what insurance perils it covers.
If you have a “named peril policy,” your dwelling insurance covers you for listed events, like a fire, storm, or theft. An “open/all peril” policy includes named perils and just about any other risk, unless your policy specifically notes it is not covered.
Examples of perils that would be covered by dwelling insurance include:
- Fire or lightning
- Windstorm or hail
- Theft
- Falling objects
- Vandalism
There are eight types of homeowners policies based on the type of home you have. Most policies include named peril coverage, meaning you’re only covered for listed events.
| Policy | Dwelling | Personal Liability | Personal Belongings | Peril Type |
| HO-1: Basic* | Yes | No | No | Named |
| HO-2: Broad* | Yes | No | Yes | Named |
| HO-3: Special | Yes | Yes | Yes | Open/Named |
| HO-4: Renters | No | Yes | Yes | Named |
| HO-5: Comprehensive** | Yes | Yes | Yes | Open |
| HO-6:Condo/Co-op | Yes*** | Yes | Yes | Named |
| HO-7: Mobile Homes | Yes | Yes | Yes | Open/Named |
| HO-8: Older homes | Yes | Yes | Yes | Named |
| Townhomes can be HO-3 or HO-6 |
*Most lenders don’t consider this sufficient coverage
**Typically for brand-new homes only
***Covered under condo association’s master policy
Special HO-3 homeowners insurance and HO-7 mobile home insurance have open/all-peril coverage for the dwelling only. However, HO-5 policies (new construction) have open peril coverage for both the dwelling and belongings.
This is why an HO-3 homeowners policy is preferred coverage for most homeowners. It offers the most comprehensive coverage for the dwelling, according to Hippo Insurance.
Exclusions and limitations
Earthquakes, floods, government seizures, mudslides, ordinance updates, sewer backups, and sinkholes are all perils that won’t be covered by standard homeowners insurance. Those will require add-on coverage using a rider policy.
Homes located in disaster-prone areas, where hurricanes, tornadoes, and wildfires are regular occurrences, will have increased premiums because these types of events are not included in basic coverage and will need to be add-on riders. In some cases, coverage is offered as a separate policy.
Determining the amount of dwelling coverage you need
Assessing the value of your home
Dwelling coverage is based on the cost to repair or rebuild your home if it’s damaged due to a covered peril. That is why the cost of homeowners insurance varies based on your dwelling type.
Vintage and heritage homes come with charm and rules and regulations for historic dwellings, making repairing or rebuilding more costly. The age, size, and location of your home, condition of your roof, and the appraised value of your home are all factors in determining coverage minimums.
Replacement cost vs. actual cash value
The replacement cost of your home is the cost to repair or rebuild it using materials of similar kind and quality, per today’s standards. According to the Insurance Information Institute (Triple-I), most modern homeowners insurance policies offer replacement cost coverage rather than actual cash value coverage, which would factor in depreciation (i.e. wear and tear).
If you own an older home, you may not be able to get full replacement cost coverage because sourcing and purchasing period-specific materials and skilled laborers can be cumbersome and expensive. Instead, insurers may offer owners of historic or older homes modified replacement cost coverage to rebuild the home using today’s standard materials and techniques, according to Triple-I.
Consulting with an insurance agent
An independent insurance agent can help you compare policies to find the appropriate coverage for your specific home and financial situation.They should be able to help you weigh the cost of adding endorsements, or riders, to your policy, which will increase your premiums.
How to increase your dwelling coverage
Policy endorsements
If you own an older home, there’s a good chance that it’s not up to current building codes. Some insurers offer a policy endorsement to cover some or all of the costs associated with permitting and complying with current building codes if your home is damaged and needs to be rebuilt or repaired.
Extended replacement cost
An extended replacement cost policy will pay a percentage over your limit, such as 20% or more, to repair or rebuild your home, according to Triple-I. This type protection factors in the potential for a surge in labor or materials costs due to a shortage or a natural disaster. It may be worth considering if you live in an area with high risks from weather, for instance.
Inflation protection
The construction industry was greatly impacted by the COVID-19 pandemic, increasing materials and labor costs. Adding an inflation protection, or inflation guard, rider to your dwelling coverage can help keep your coverage limits on pace with inflation. Still, you should review your policy annually and adjust your limits as needed.
Ronda is an attorney, writer, and entrepreneur. She is a contributing writer for the Huffington Post. Originally from Chicago, she has lived in Los Angeles and New York. She loves to travel and is passionate about education equity, especially for first generation college students.