Dwelling coverage is the part of your homeowners policy that pays to repair or rebuild your home's physical structure after a covered loss. This includes the walls, roof, floors, foundation, built-in appliances, electrical systems, plumbing, and HVAC. It is the largest and most important coverage on your homeowners policy.
Your dwelling coverage limit should equal the estimated cost to completely rebuild your home from the ground up at current prices. This is called the replacement cost and is not the same as your home's market value or what you paid for it. Market value includes land, location, and market conditions. Replacement cost is purely the cost of materials, labor, and construction to rebuild the structure.
If your dwelling coverage is too low — a situation called being underinsured — you may not receive enough to fully rebuild after a total loss. Some policies include a coinsurance clause that penalizes you if your coverage is below a certain percentage of your home's replacement cost (typically 80%). If you are insured at 70% of replacement cost and have a coinsurance requirement of 80%, you could receive only a proportional payout even for partial losses.
Have your dwelling coverage reviewed annually to ensure it reflects current construction costs. At Truscott, we use replacement cost estimators and factor in local labor and material prices to set accurate dwelling limits. Request a Truscott policy checkup and we will verify your dwelling coverage would actually rebuild your home.
An inflation guard endorsement automatically raises your dwelling coverage each year so it keeps pace with rebuild costs. Here is how the adjustment works, why your Coverage A number changes at renewal, and when the automatic increase is not enough.
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