Dwelling coverage protects the physical structure of your home and anything permanently attached to it, like a garage. If a fire, storm, or other disaster damages your house, this coverage pays to repair or rebuild it. Your dwelling coverage amount should equal your home’s replacement cost, which is what it would actually cost to rebuild from scratch at today’s labor and materials prices.
Jerry has helped over 54,000 homeowners compare quotes in the past year for policies that include dwelling coverage, helping them get the coverage they need to protect one of their most important purchases. Here’s what dwelling coverage pays for and how much you need.
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What dwelling coverage pays for
Dwelling coverage, also called Coverage A, protects the parts of your home that are permanently attached to its structure. If a covered event causes damage to your home’s structure, your home insurance policy pays to repair or rebuild it, after you pay your deductible.
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Roof and walls, including siding, shingles and structural framing.
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Foundation and floors, including carpeting.
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Attached garage or carport.
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Built-in appliances, like water heaters, HVAC systems and furnaces.
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Permanent fixtures, like cabinets, countertops and built-in shelving.
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Porches and decks, as long as they’re attached to your home.
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Electrical and plumbing systems, including wiring, pipes and fixtures inside your walls.
Here’s an example of how dwelling coverage works.
Some policies have different deductibles for Coverage A depending on the type of damage, especially if you live in a higher-risk area. For example, your policy might have a 2% deductible for wind and hail damage but only 1% for all other covered perils.
Key takeaway: Dwelling coverage pays to repair or rebuild your home’s permanent structure including the roof, walls and foundation if a covered peril causes damage.
What is a covered peril?
Your dwelling coverage protects against specific perils, which are events that can damage your home.
Covered perils typically include:
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Fire and smoke.
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Wind and hail.
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Lightning.
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Explosions.
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Cars crashing into your home.
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Falling objects, like trees or debris.
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Sudden water damage from burst pipes.
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Vandalism and theft.
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Ice and snow.
The perils you’re protected against depend on whether you have a basic, broad or special (open perils) policy. Basic covers the fewest, while special coverage protects against all perils, except those specifically excluded. A policy with special coverage will typically cost more than basic coverage. Read your policy carefully to understand exactly what’s covered and what isn’t.
Why it matters: Most standard home policies offer open peril coverage for your dwelling, which means you’re protected against all risks that aren’t specifically excluded in your policy documents. This is different from a named perils policy, which only covers risks explicitly listed.
Compare home insurance quotes with Jerry
Finding the right dwelling coverage starts with comparing quotes, and Jerry makes it easy to see options from over 12 insurers so you can find the coverage you need at the best price.
Plus, Jerry lets you mix and match policies from different insurers to get the best rates on both home and auto so you can bundle your home and car insurance together for additional savings.
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How much dwelling coverage do you need?
Your dwelling coverage should equal the replacement cost of your home, which is what it would cost to rebuild from scratch at today’s labor and materials prices. This is different from your home’s market value, purchase price or mortgage balance.
Most insurers require you to have dwelling coverage that is equal to at least 80% of your home’s replacement cost. If you don’t meet this threshold and file a claim, your payout may be reduced, even if the claim is below your policy’s limits. That means you’ll need to cover a larger portion of the repairs out of pocket.
Here’s how to estimate your home’s replacement cost.
🧮 Use the Jerry app.
You can see your home’s recommended dwelling coverage limits by using the Jerry app. Once you enter your information, we’ll automatically fill in your home’s estimated replacement cost.
📐 Multiply square footage by local building costs.
A rough estimate is $150 to $400 per square foot, depending on your area and home features.
🏠 Get an appraisal.
For the most accurate number, hire a professional or ask your insurer for an on-site inspection.
Why it matters: If your dwelling coverage is too low, your insurer may reduce your payout, leaving you to cover the gap out of pocket when you need help most.
What dwelling coverage doesn’t pay for
Dwelling coverage is designed to protect your home’s main structure, but there are limits to what it will cover.
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Detached structures like sheds, fences and pool houses. These are covered under Coverage B (Other Structures), not dwelling coverage.
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Personal belongings, like furniture and clothing. These are covered under Coverage C (Personal Property).
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Flood damage. You’ll need separate flood insurance, which can be purchased through state and national programs.
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Earthquake damage. You may need an earthquake policy, though some carriers offer coverage as an endorsement.
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Wear and tear. Your policy covers sudden damage, not gradual deterioration from age or neglect.
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Maintenance issues, like a leaky roof. This type of damage is only covered if it was caused by a recent storm, falling tree or other acute peril.
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Pest damage. Damage from termites, rodents and other critters isn’t covered.
Key takeaway: Dwelling coverage excludes detached structures, personal belongings, flood and earthquake damage, wear and tear, maintenance issues and pest damage. You’ll need other coverages or separate policies for these.
Replacement cost vs. actual cash value
If you file a dwelling coverage claim, how your insurer calculates your payout depends on whether your policy includes replacement cost or actual cash value.
Replacement cost value (RCV)
This pays what it costs to repair or rebuild your home at today’s prices, without taking depreciation into account. RCV is what most standard policies use for dwelling coverage.
Actual cash value (ACV)
This pays out for replacement cost minus depreciation. So if your 15-year-old roof is destroyed, you’d get what it’s worth today – not what a brand new roof actually costs to install. ACV policies are typically cheaper but pay out less.
Jerry recommends: Consider getting a home policy with replacement cost. You want your insurance to rebuild or repair your home after a claim, not just pay for what it used to be worth.
Extended and guaranteed replacement cost
Even with replacement cost coverage, there’s a risk: What if rebuilding costs more than your policy limit? That’s where these upgrades come in handy.
Extended replacement cost
This adds an extra 25% to 50% on top of your dwelling limit. So if you’re insured for $300,000 with 25% in extended coverage, you’d actually have up to $375,000 available for a covered loss.
Guaranteed replacement cost
This pays whatever it costs to rebuild your home, without a cap. If a widespread disaster drives up labor and material costs, you’re still fully covered. This is the most comprehensive option, but also the most expensive, and not every insurer offers it.
Why it matters: After major disasters, construction costs can spike due to high demand for materials and labor. Extended or guaranteed replacement cost protects you from being caught short if your dwelling coverage limits are too low.
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faq
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🏠 What’s the difference between dwelling coverage and homeowners insurance?
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🚗 Does dwelling coverage include my detached garage?
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📊 How do I know if I have enough dwelling coverage?
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🏚️ Does dwelling coverage pay for roof damage?
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💸 What happens if my rebuilding costs exceed my dwelling limit?
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📋Is dwelling coverage required?
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🔄 How often should I review my dwelling coverage?
Ben Moore is a writer and editor at Jerry and an auto insurance expert. He previously worked as a writer, editor and content strategist on NerdWallet’s auto insurance team for five years. His work has been published in The Associated Press, Washington Post, Chicago Sun-Times, MarketWatch, Nasdaq and Yahoo News. He also served as a NerdWallet spokesperson, with appearances on local broadcast television and quotes in Martha Stewart and Real Simple magazine.
Ben has an extensive background in digital marketing, working on affiliate and programmatic advertising campaigns for brands like Cabela’s, H&R Block and Sears. He holds a bachelors degree in marketing from Olivet Nazarene University.
