Many homeowners already know that contents coverage protects the belongings within your home. All of the items that make a home unique—clothing, furniture, electronics, artwork, etc.—will be covered under this section of the policy.
And while this coverage is undeniably important, it’s the dwelling insurance coverage, sometimes referred to as Coverage A, which is essential to a typical homeowners’ policy. It protects the homeowner’s investment by helping to pay for repair or replacement of the structure if it’s damaged or destroyed by a covered loss.
What is a dwelling?
A dwelling is a house or structure in which someone lives, and it includes anything that’s attached to it, like a garage or deck. Detached structures such as sheds, fences, above-ground swimming pools, and garages are covered under separate sections of the policy, as is all of the personal property within the dwelling.
The following parts of a house are typically included in a policy’s dwelling coverage:
- Attached garage
- Screened-in patio
- Attached deck
- Permanent fixtures such as countertops, sinks, floors, and cabinets
- Built-in appliances that include water heater and furnace
What risks are included in dwelling insurance coverage?
Common risks that are covered by dwelling insurance include damage from:
- Falling objects
Here’s an example: A home is hit with high winds. Some of the siding has been blown off, and a tree has fallen on the roof. While both of these incidents are covered under the policy, the homeowner needs to know the details. Is matching siding covered under the base policy, and is the roof damage insured with replacement cost or actual cash value coverage?
Homeowners must decide how much risk they are willing to share and then adjust their coverage limits before they encounter one or more of the risks mentioned above.
What is excluded from dwelling insurance coverage?
Dwelling coverage protects you from many risks, but there is a handful that won’t be covered unless the policyholder adds them as optional coverage:
- Floods: Although homeowners’ insurance does not cover flood damage, NSI Insurance Group can help homeowners obtain a separate flood insurance policy.
- Earthquakes: Optional earthquake coverage can be added to a standard homeowners’ policy.
- Detached structures: Structures that include sheds, above-ground pools, garages, or gazebos can be protected by purchasing “other structure coverages” to cover them.
How much dwelling coverage does someone need?
When it comes to dwelling insurance coverage, one size rarely fits all. The amount of coverage needed can depend on several factors, but the most important consideration is to have enough coverage to replace your home without having to pay out-of-pocket because of being underinsured.
Remember, there is no direct link between the price you paid for your home, its current market value, and its replacement cost. Elements such as square footage, style, inflation, local construction costs, and whether some of it was custom-built all factor into the equation.
If your house is destroyed by fire, for example, you will need to have obtained enough coverage to reconstruct the home completely. That means you should have already taken into account variables like type of materials that were used originally and any features—deck, playroom, solar panels–that were added along the way.
Looking at this should emphasize the benefit of having the home assessed by an insurance agent, so the dwelling coverage is sufficient to cover a total loss. Homeowners must take this step before they know what coverage they need.
Structures not covered by dwelling insurance
Although dwelling insurance adequately protects the home, it’s not prudent to forget about the 1400 square foot workshop/storage building on the other end of the property. This is where “other structures” coverage is needed.
It’s the coverage that protects the detached buildings on your property, and it protects them against the same types of risks that could befall the house—fire, storms, falling trees, and vandalism. In addition to the workshop, other structures could include detached garages, above-ground pools, fences, and gazebos.
Be aware that other structures coverage protects only the structure itself. Anything that is stored inside them is protected under the personal property provision of your homeowners’ policy.
Will homeowners association fees pay for dwelling coverage?
Probably not. As a rule, HOA fees for single-family homes don’t include homeowners’ insurance. These fees typically cover common areas, but it’s the responsibility of each family to insure their homes.
Dwelling coverage for a rental property
Those who rent their property out to others are not responsible for what happens to their tenants’ personal property. They are, however, responsible for the apartment structure and the individual unit they are renting out. Many insurers offer special coverage for landlords such as dwelling fire insurance and landlord insurance to protect their property against potential hazards.
Still have questions?
If you’re like the majority of homeowners, your home is your biggest investment. It’s imperative that you understand how dwelling insurance protects you. For all your dwelling coverage needs, NSI Insurance Group is here to help.
Contact us today.