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Dwelling insurance is a highly significant portion of your homeowners insurance policy that protects the physical structure of your home. This type of coverage reimburses you for damage to things such as your:

  • Walls
  • Electrical wiring
  • Plumbing
  • Heating and air conditioning

Key Takeaways

  • Dwelling coverage is the part of a homeowners insurance policy that covers the physical structure of your home, including other structures on the property.
  • Use a replacement cost calculator to enter your information and easily determine how much dwelling coverage you need.
  • Experts recommend dwelling coverage equal to 100% of the replacement cost of your home.
  • To be covered for things like earthquakes and floods, you may need an additional policy or endorsement.

Dwelling policy coverage also includes attached structures, such as your garage, as well as built-in features such as chimneys and porches.

It is essential to zero in on the right amount of dwelling coverage for your home. Purchase too little, and you are not adequately covered. Purchase too much, and your home insurance will be more expensive than necessary.

To arrive at the right figure for your home, consult with a licensed insurance agent with access to a replacement cost calculator, says Patrick O’Keefe, an owner and managing partner of Cascade Insurance Center in Bend, Oregon.

“These calculators factor in the price of goods and labor in your ZIP code, along with features of the house which include square footage, quality (and) unique features,” he says. 

What is covered under dwelling insurance?

Dwelling insurance will cover your home if it suffers damage due to a slew of typical perils. If lightning from a summer storm strikes your house and starts a fire, you will be covered. If a winter storm piles up snow that causes your roof to collapse, dwelling coverage can help make you whole.

Most homeowners insurance policies will cover damage related to the following hazards, according to the Insurance Information Institute:

  • Fire or lightning
  • Windstorm or hail
  • Explosion
  • Riot or civil commotion
  • Damage caused by aircraft
  • Damage caused by vehicles
  • Smoke 
  • Vandalism or malicious mischief
  • Theft   
  • Volcanic eruption
  • Falling object   
  • Weight of ice, snow or sleet

Other covered hazards include things such as accidental discharge or overflow of water or steam, freezing of a plumbing, heating or air conditioning system and more.

These are just general guidelines for what is included in dwelling coverage, so read your policy closely to know exactly what it does — and does not – cover. Coverage can vary from insurer to insurer.

What isn’t covered under dwelling insurance?

While dwelling coverage will protect you from damages associated with a host of events and natural disasters, some losses are not covered.

For example, if the river in your town swells and floods your home, you will not be covered because flood damage isn’t covered by a standard homeowners insurance policy. Similarly, if an earthquake causes structural damage to your home, the damages won’t be covered by homeowners insurance.

If you live in an area prone to floods or earthquakes, you will need a separate flood or earthquake insurance policy. You can also add an earthquake rider to your homeowners insurance policy. 

Additionally, dwelling coverage doesn’t cover damage that is caused due to neglect or if structures that are not directly connected to your home are damaged. 

Talk to your insurance agent about what is or isn’t covered by your policy so you can get additional coverage if necessary.

How much dwelling coverage do I need on my homeowners insurance?

Wondering how to calculate dwelling coverage? You should talk to your insurance agent to determine the right amount — but as a general rule, your homeowners insurance should cover the full cost to replace your home. That means you should purchase coverage in a dollar amount equivalent to 100% of the cost of rebuilding your home from scratch.

Even after you figure out the right amount, you should update your policy periodically. Alongside inflation, building and repair costs can grow over time, so it is crucial to keep an eye on your dwelling coverage limits and make sure they do not slip below the cost to replace your home. It is also possible to get an inflation guard endorsement that will increase your dwelling coverage limit annually to keep it in line with inflation.

The NAIC notes that if your dwelling coverage falls below 80% of the home’s full replacement cost, your insurer may refuse to pay out your claim in full.

How is dwelling coverage calculated?

To calculate how much dwelling coverage you need, you first need to know how much it costs to rebuild. You want to be sure that you are using current construction costs for your local area. A real estate agent or home construction company can help you with these details.

Once you have the cost to rebuild, you can calculate how much dwelling coverage you need. All you need to do is multiply the square footage of your home by the square-foot price of local rebuild costs. 

Square footage x Current area rebuild cost per square foot

Our dwelling coverage calculator can help you figure out exactly how much dwelling coverage you need.

Also, do not forget that in addition to the cost to rebuild, there may be other costs, such as tear-down and debris removal and labor and construction costs.

What is extended dwelling coverage?

In some cases, you may want to purchase coverage beyond the full replacement cost of your home. This is known as extended dwelling coverage.

“Extended dwelling coverage is designed to give wiggle room from the replacement cost coverage listed on your policy,” O’Keefe says.

For example, if a tornado sweeps in and destroys an entire neighborhood, the cost of labor and materials to rebuild could soar. In such situations, extended dwelling coverage can provide the extra insurance you need to repair or rebuild your home.

“This is included in many policies, but not all,” O’Keefe says.

O’Keefe says a licensed insurance agent can help advise you on whether extended dwelling coverage is right for your specific situation. 

What is replacement cost coverage?

Replacement cost of covering your home is not the same as the home’s market value. Replacement coverage includes not only your dwelling coverage but also coverage for the physical structure and your personal belongings. 

Market value can fluctuate and also includes the price of the land under your home. By contrast, full replacement cost is how much you would need to spend to actually replace the home in the event of a complete loss.

So, talk to your insurance agent to make sure you are not purchasing too much coverage. For example, the Insurance Information Institute warns that if you fail to account for the value of your land – and subtract that value from your home’s replacement cost – you might end up purchasing too much coverage.

Frequently asked questions

Does dwelling insurance cover water damage?

Dwelling insurance covers some forms of water damage but not others. For example, if a pipe bursts, your policy likely will cover the event.

But there are many other situations where you are not covered for water damage.

Dwelling coverage does not protect you in the event of a flood, which is defined as an event that covers at least two acres or affects two properties. To get this type of coverage, you would need to purchase a separate flood insurance policy.

The policy also would not protect you in the event of a sewer backup, although you might be able to purchase an endorsement to your policy that would protect you in case of such an event.

And if you fail to properly maintain your home and suffer damages. As a result, you likely will not be covered. So, while damage from a pipe that suddenly bursts likely would be covered, you probably would not be covered if a pipe has been leaking for a long time and you have not bothered to fix it.

Why is my dwelling coverage so high?

The cost of dwelling coverage may seem high at first blush. But remember, this insurance coverage can make you whole if you experience a major loss.

Experts generally recommend insuring for your home’s full replacement value. For that reason, dwelling insurance might be more expensive than you like. But the peace of mind of knowing your most expensive possession is covered is priceless.

How much dwelling coverage do I need for a condo?

How much dwelling coverage you need for a condo depends on several factors, including the size of your condo and your belongings. Most important is the master insurance policy for the building, so be sure to check in with the condo association to see what type of coverage is included. For example, Bare Walls In has far less coverage than an All-In option. 

Bare Walls In coverage: Bare Walls In means that your association maintains minimal coverage that does not include your belongings within those four walls. Even the appliances and fixtures are not covered, so you will need to purchase additional coverage to protect them.

All-In coverage: All-in coverage is an all-inclusive policy that covers both the interior and exterior of your building, so all that is left to insure are your personal items and belongings. This includes items like your furniture, electronics, and clothing. 

Once you know what is covered by your condominium association, you can determine how much dwelling coverage you need to buy for your condo. 


Insurance Information Institute (III).” How much homeowners insurance do I need? ” Accessed August 2022.

Department of Commerce & Insurance and National Association of Insurance Commissioners (NAIC). “ A Consumer’s Guide to Home Insurance ” Accessed August 2022.

– Chris Kissell contributed to this article

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Lena Borrelli
Contributing Researcher


Lena Borrelli is a freelance writer from sunny Tampa Bay who has worked with such leading industry titans as Gronk Fitness, Morgan Stanley, Wells Fargo and Simon Corporation. Her work has most recently been published on sites like TIME, Microsoft News, Bankrate, Investopedia, Fiscal Tiger, The Simple Dollar, ADT and Home Advisor.