Dwelling coverage is part of most homeowners insurance policies, and it can cover the cost of repairing or rebuilding your home

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  • Dwelling coverage is the part of a homeowners insurance policy that covers the cost to repair or rebuild your home.
  • Dwelling coverage depends on the type of homeowners insurance and peril policy you have.
  • Standard HO-3 homeowners insurance offers the most comprehensive dwelling coverage.
  • You'll need to add a rider policy to get covered for certain perils including floods and earthquakes.
  • Policygenius can help you compare homeowners insurance policies to find the right coverage for you, at the right price »

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 it's covered by your particular policy. 

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. The State Farm she-shed commercial is a good example of dwelling coverage. 

In insurance terms, your dwelling consists of your home and any other structures on the property, like a garage or shed. The type of dwelling coverage you have depends on the type of homeowners insurance policy and whether it covers named-perils or open-peril insurance.

Condo and renters insurance do not include dwelling coverage

If you purchased a condo, the association is the owner of 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. Therefore, it is the landlord's responsibility to insure the dwelling. Renters insurance only protects your belongings. 

What does dwelling insurance cover?

Dwelling insurance varies based on your homeowners insurance policy and what perils it covers.

If you have a "named-peril policy," your dwelling insurance covers you for listed events, like a fire, storm, or theft. With an "open/all-peril" policy, just about anything that might happen is covered, with the exception of anything that your policy specifically notes 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 of the policies include named-peril coverage, meaning you're only covered for listed events.

PolicyTypeDwellingPeril Type
HO-1Basic*YesPeril
HO-2Broad*YesPeril
HO-3SpecialYesOpen & Peril**
HO-4RentersNoPeril
HO-5Comprehensive***YesOpen
HO-6Condo/Co-opYes****Peril
HO-7Mobile HomesYesOpen & Peril**
HO-8Older HomesYesPeril

Data from Hippo Insurance

*Most lenders don't consider this sufficient coverage.

**The structure is "open/all peril" while belongings are "named peril."

***Typically for brand-new homes only.

****Check your association's master policy.

Standard HO-3 homeowners insurance and mobile home insurance have open/all-peril coverage for the dwelling. If you have an HO-3 or HO-7 policy, your home and any structure attached to the property (such as a shed or garage) is covered from just about anything — unlike with the other homeowners policies that only have named-peril coverage for dwellings. 

This is why an HO-3 homeowners policy is preferred coverage for those who own a house. It offers the most comprehensive coverage for the dwelling, according to Hippo Insurance.

What isn't covered by dwelling insurance?

Earthquakes, floods, government seizures, mudslides, ordinance updates, sewer backups, and sinkholes are all perils that won't be covered by homeowners insurance, according to Hippo Insurance. Those will require add-on coverage using a rider policy.

Homes located in disaster-prone areas — hurricanes, tornadoes, and wildfires — will have increased premiums because these types of events are not included in basic coverage and will need to be add-on riders. 

How much dwelling coverage do you need?

Dwelling coverage is based on the cost to repair or rebuild your home in the event that it's damaged due to a covered peril. That is why the cost of homeowners insurance varies based on the type of dwelling you have.

Vintage and heritage homes come with charm and rules and regulations for historic dwellings, making the cost to repair or rebuild more costly. The age of your home, roof, appraised value of your home, location, and size of your home are all factors in determining premium rates coverage minimums.

Additionally, if you have a mortgage, your lender may have a preference for the amount of coverage. 

What is homeowners insurance?

Homeowners insurance protects the dwelling, your belongings, and offers liability coverage for injuries that happen on your property. If the mailman slips and falls on your sidewalk, the dog bites a guest, a tree falls on your roof, or the neighbor's kid injures himself doing a cannonball in your swimming pool, homeowners insurance can protect you. If you live in a condo/co-op, the condo association's master policy covers the building and common areas, but condo insurance covers your unit.

Unlike car insurance, homeowners insurance is not required by state law. However, if you have a mortgage, your lender will require homeowners insurance to protect the investment. 

How to find homeowners insurance

It is recommended that you review your policy coverage yearly, and if your homeowners insurance company hasn't provided the level of service you expected, it could be time for you to select a new provider. Read Business Insider's picks for best homeowners insurance companies. You can also contact your auto insurance provider and see if you can bundle your car and homeowners insurance.

Ronda Lee is an associate editor for insurance at Personal Finance Insider covering life, auto, homeowners, and renters insurance for consumers. She is also a licensed attorney who practiced litigation and insurance defense.

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