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For Owners of Homes and Condos: Understanding Dwelling Coverage

understanding dwelling coverage

It’s estimated that about 95 percent of homes are covered by a homeowners insurance policy. But just because a lot of homeowners have it doesn’t mean that they understand it. A common point of confusion for some is understanding dwelling coverage and how it pertains to the overall protection provided by their policy.

If you’re in the market for home insurance or would like to learn more about how dwelling coverage helps protect your investment, read on.

Dwelling Coverage: Short and Simple

To put it simply, dwelling coverage is part of your home insurance policy that outlines the amount of coverage provided to repair or rebuild the physical structure of your home.

The key term to note here is physical structure. A home insurance policy covers a variety of home-related things, like your personal belongings, furniture, other structures (think sheds and poolhouses), and more.

If your home is damaged by a covered loss, such as fire, water, lightning strike, etc., the amount of dwelling insurance you have will help pay to repair your house. This includes built-in systems and appliances like your HVAC system, water heater, and plumbing.

It will also help pay for attached structures, such as your porch and garage.

How Much Dwelling Coverage Do I Need?

The amount of dwelling coverage necessary to be fully protected will vary from home to home. Generally, your coverage limit should be equal to the replacement cost of your home.

What Is the Replacement Cost?

The replacement cost of your home is the amount of money it would take to replace the property that has either been stolen or damaged by a covered loss at current market prices. This includes fully rebuilding your home from the ground up.

To make sure you have enough dwelling coverage, you’ll want an accurate rebuild estimate. These can be obtained using a dwelling coverage calculator or through a replacement cost appraisal.

What If I Own a Condo?

For condo owners, things can be a little more complicated. The amount of dwelling coverage you’ll need will depend on your HOA’s master policy.

The master policy usually covers the building structure itself, the land surrounding the building, and any common areas. It will also usually include some amount of structural coverage for each unit.

You won’t always need dwelling coverage if you own a condo. More often than not, though, you will. To determine how much you’ll need, you will have to find out if the Home Owners’ Association master policy is single-entity, bare walls, or all-in coverage.

Bare Walls

Bare walls coverage extends to the structure of the building and any common areas that the HOA owns. The amount of structural coverage to your unit is usually minimal. It covers things like drywall, plumbing, insulation, framing, and wiring.

If your HOA uses a bare walls policy, you’ll need enough dwelling coverage to replace the whole interior of your unit.


Single-entity policies cover everything that bare walls policies do. They also cover some things that are outside the walls of your condo, such as cupboards, bathroom fixtures, and flooring.

If your HOA uses this type of policy, you’ll only need enough dwelling coverage to replace any alterations you make to the property.

All-In Coverage

If your HOA uses an all-in coverage policy, you’re in luck! These policies cover the entire structure of your condo, including any improvements or alterations you make, and the appliances.

You probably won’t need any amount of dwelling insurance in this case.

What Portion of the Home Is Considered the Dwelling?

Insurance companies consider the dwelling portion of the home to include the actual home itself, built-in appliances (HVAC, Furnace), and any attached structures (porch, garage).

Your personal belongings and any other structures that aren’t attached to the home are not considered part of the dwelling. Different sections of your policy cover these.

What Does It Cover?

What your insurance does and does not cover will vary depending on the type of policy you have and which home insurance company you choose. Your policy will spell out every type of covered loss for which you can file a claim. These often include, but are not limited to:

  • Explosions
  • Riots
  • Wind/Hail
  • Smoke
  • Theft
  • Vandalism
  • Falling objects
  • Damage caused by a vehicle
  • Falling aircraft
  • Burst pipes
  • Volcanic eruption
  • Appliance overflow

If you suffer losses because your home has been damaged by any covered sources, you can file a claim with your insurance company for reimbursement.

What Isn’t Covered?

Your dwelling coverage is designed to protect you from losses from a number of common sources. However, not everything will be covered in your policy. Some perils aren’t covered. These often include:

  • Earthquakes
  • War
  • Intentional loss
  • Sinkholes
  • Floods
  • Sewer backups
  • Regular wear and tear

It’s important to note that your dwelling coverage doesn’t protect other structures on your property. If you have a fence, shed, unattached garage, gazebo, or other structure on your property, it will be covered under the other structures portion of your home insurance.

Most of the time, you won’t need anywhere near as much coverage on the other structures portion of your policy. The coverage amount of this portion of your policy is usually around 10 percent of your dwelling coverage limit.

What Is Extended Dwelling Coverage?

Extended dwelling coverage is an additional amount of coverage your insurance company will provide if you experience a total loss that’s greater than the dwelling coverage stated on your policy. In a way, extended dwelling coverage works as insurance for your insurance.

For example, if you have $200,000 in dwelling coverage and your policy provides you with extended dwelling coverage in the amount of 25 percent, your total amount of dwelling coverage in the event of a total loss will be $250,000.

What Is a Total Loss?

A total loss is when the insured home is completely destroyed or damaged to such a degree that repair is impossible. In situations like this, you should qualify for a full payout of the property’s insured value.

Putting It All Together

Dwelling coverage is the portion of your home insurance policy that protects the structure of your home. It includes built-in appliances such as your HVAC system and furnace. The amount of coverage you need depends on the total replacement cost of your home.

If you’d like more information on dwelling insurance, or if you’d like to start shopping for policies, contact us today.

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