It’s important to understand your insurance.
Let’s take a closer look at dwelling coverage.
If you’re like most people, you probably take one look at your Declarations page and your eyes instantly glaze over. What are all these numbers and abbreviations? Is this thing even in English? And what is this “Coverage A”?
The insurance industry is notorious for having indecipherable lingo, but at Harry Levine Insurance, we believe that educating you about your insurance is the best way for you to make good decisions and get great coverage.
In this article, we’re going to take a deep dive into the ever-important Dwelling Coverage so you can understand what type of policy you need.
Dwelling Coverage vs. Dwelling Fire Insurance
If you’ve ever heard the terms dwelling coverage and dwelling fire insurance in your agent’s office, you might have assumed the two were interchangeable (assuming that your eyes weren’t glazing over again!). In fact, they are two different things.
Dwelling Coverage is one type of coverage that—when bundled together with other types of coverage—make up a typical homeowners insurance policy.
Dwelling Fire Insurance is a separate type of policy made of a different set of coverages.
Still confused? Let’s unpack it a bit further.
What Does Homeowners Insurance Cover?
What we call “homeowners insurance” is not just one type of insurance. It’s a set of specific coverages within a single policy.
While individual coverage levels vary from policy to policy, here are some examples of the coverages that you may see listed on a Homeowners Insurance policy:
Coverage A: Dwelling – Covers damage by a covered loss to the structure of your home as well as attached structures, such as a patio or porch
Coverage B: Other Structures – Covers damage to other freestanding structures on the property, such as a detached garage or shed
Coverage C: Personal Property – Covers the loss of personal property (i.e. anything that would fall out if you took the roof off and gave it a good shake)
Coverage D: Loss of Use – Reimburses your additional living expenses if your home becomes uninhabitable due to a covered loss
Coverage E: Personal Liability – Covers medical and/or legal bills if a third party files a lawsuit against you for physical injury or property damage to their property
Coverage F: Medical Payments to Others – Covers the cost of medical treatments if a third party injures themselves on your property
As you can see, dwelling coverage is only one portion of your homeowners policy and applies to the physical structure of your home.
In the event of a covered loss (that is, a loss that’s not excluded on your insurance policy), Your Coverage A – Dwelling insurance covers the cost to rebuild your home. Your home’s foundation, walls, roof, and appliances can be included in this coverage and damage must be due to a covered loss and not wear and tear.
What Is Dwelling Fire Insurance?
Dwelling fire insurance is similar to the dwelling insurance on a homeowners policy, but it is much more restrictive and intended mostly for homes that are tenant occupied or rented out by the owner; the owner doesn’t (but can) live there.
This type of policy is often purchased by people who own a vacant home or investment property, and thus don’t need personal property or liability protection.
However, you can also purchase Dwelling Fire Insurance if you reside in the home as well. If you have a vacation home, hunting lodge, or a residence that you live in for only a portion of the year, Dwelling Fire Insurance can provide you with some peace of mind. You may even be able to add some personal property protection to your policy.
Dwelling Coverage Limits
It’s important to note that both Dwelling Coverage and Dwelling Fire Insurance do not take into account the value of your land, your school district, or the intrinsic value of your neighborhood.
In other words, you won’t be reimbursed according to the cost to buy a new home in the same neighborhood, but the costs of rebuilding your home as it was. If you own an older home that doesn’t comply with modern building codes, you may need to increase your dwelling coverage limit or purchase Ordinance or Law coverage to make up the difference.
Due to the rising costs of construction, it is vital that you have the appropriate amount of coverage to rebuild in the event that disaster strikes.
Do I Need Dwelling Fire or Homeowners Insurance?
For a non-owner-occupied home—such as a rental property—a Dwelling Fire Insurance policy may be enough. But if you live, work, and host guests at your home, a homeowner policy should help provide more robust financial protection.
Even though homeowners insurance already includes dwelling coverage, you should discuss your needs with your local independent insurance agent to make sure your policy limits are enough. They will take the time to sit down with you and discuss things like your lifestyle and risk tolerance to help you arrive at coverage that makes sense for you.
Conclusion
Whether you own or rent, own one home or many, having the right insurance coverage is more than a good idea. It’s protection against the multitude of disasters that can come your way.
At Harry Levine Insurance, we put our knowledge and experience to work by finding you the best policies and coverage for your needs. And because we’re independent insurance agents, we have the freedom to shop the market to bring you quotes from multiple insurance companies that fit your needs as well as your budget.
Call today for a free quote.
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