Buying a home is a significant investment that requires protection. Homeowners’ insurance provides this protection in the form of dwelling coverage. Although all parts of your homeowners’ insurance policy are important, dwelling coverage is what covers your home’s actual structure.
Many policyholders miss out on certain benefits because they don’t fully understand the language of their policy. This is where a public adjuster comes in because they can break down complex terms for you. They can also handle all claims on your behalf. It is key to contact one immediately after filing a claim.
In this article, we explain the nitty-gritty of dwelling coverage, including its extent and limits. By the end of this article, you will be able to make more informed decisions about your policy.
What is Dwelling Coverage?
Dwelling coverage is the part of your insurance policy that pays for damage to your home’s structure. It is often called Coverage A because it is the first coverage you will find in a standard homeowners’ policy. Your home’s structure includes your roof, walls, floors, and beams. This coverage also extends to attached structures of your home such as decks and garages.
You are not legally required to have dwelling coverage as a homeowner. However, many lenders require hazard insurance which is similar to dwelling coverage. This is to protect their investment and avoid total loss. Nevertheless, purchasing dwelling coverage is a smart move for any homeowner because paying out-of-pocket for repairs is costly.
How Does Dwelling Coverage Work?
Dwelling coverage works like most other forms of insurance coverage. You need to pay premiums promptly to keep your policy active. When your property’s structure suffers damage, you need to file a claim with evidence of damage. It is best to contact your insurer for any additional information they may require.
However, your insurer will only pay if a covered peril caused the structural damage. Covered perils are events that your insurer will pay for such as an unexpected fire.
You should look out for exclusions and deductibles before filing a claim on your policy. Your policy limit is the maximum amount your insurer will pay for a claim. A deductible is an amount you must pay before receiving settlement. For instance, if the damage will cost about $5000 to fix, your insurer may require you to pay $500.
Your settlement also depends on whether your policy was for replacement cost value or actual cash value. Actual cash value policies factor in depreciation and as such, are cheaper. However, they also carry the risk of underinsurance.
What Does Dwelling Coverage Cover?
The specifics of your coverage will differ from policy to policy. Many policies are “open perils” which means that they cover any risk that isn’t explicitly excluded.
Nevertheless, here are some types of property damage that the average dwelling coverage policy covers:
Wind and Hail Damage
cvbMost homeowners’ insurance policies cover storm damage which wind and hail fall under. Wind damage includes tornadoes but may exclude hurricanes. This is especially so in states prone to hurricanes.
Fire and Smoke Damage
This is provided for in nearly every insurance policy as it is a common risk. Your dwelling coverage will reimburse you for fire or smoke damage to the structural components of your home. However, this coverage excludes arson as it is a crime.
Vandalism and Theft Damage
Many policies provide coverage for structural damage by vandals or thieves. For example, they may damage your walls or spray paint your roof. The damage from the vandals should be intentional and not involve anyone that your policy covers.
Snow, Ice, or Sleet Damage
Dwelling coverage generally covers structural damage from the weight of snow on your roof. It also covers other forms of structural damage from sleet and ice such as frozen pipes causing water damage.
Riots, Civil Unrest, and Explosions
If a riot or other form of unrest erupts in your area and causes property damage, your policy will cover it. Additionally, it will cover any explosions that damage your home.
Falling Objects and Vehicles
A strong windstorm may uproot a tree and cause it to fall on your home which damages your roof. Your dwelling coverage policy will cover this. It will also cover any vehicle damage to your home. For example, a car may run into the side of your home, damaging your walls.
What Does Dwelling Coverage Not Cover?
Dwelling coverage does not accommodate all forms of structural damage. It excludes the following:
Wear and Tear
If the structural components of your home fall apart because they are too old, your insurer will not cover that. This is because insurance covers unexpected losses. Regular wear and tear is often expected.
Floods and Earthquakes
These two natural disasters usually require a separate insurance policy. If you live in an area prone to floods, it is best to discuss flood insurance with your insurer. Additionally, your coverage may exclude damage due to earth movements such as earthquakes and mudslides. Some insurers provide extra coverage that you can purchase.
Damage From Infestations
Insect and rodent infestations can damage your property’s structure. For instance, a termite infestation may ruin your floorboards and cause them to fall through. Insurance companies believe that homeowners should take measures against these issues and as such, they may not cover it.
Sewer Backup
Insurance companies rarely provide coverage for water backup from sewers or sump pumps. However, you may purchase additional coverage for some peace of mind.
Vacant Buildings
Dwelling coverage rarely extends to properties that have been unoccupied for more than 60 consecutive days. This is because such properties are considered vacant and as such, require a different insurance policy.
How Much Dwelling Coverage Do I Need?
Insurance companies usually recommend a coverage limit when consumers are trying to buy policies. However, it is up to you to increase or reduce that limit. You should ensure that your dwelling coverage limit is enough to rebuild your home if it is completely destroyed.
For example, let’s assume that it will cost $200,000 to rebuild your home. You should ensure that your dwelling coverage limit is around that amount. If it isn’t, you might be stranded when your property suffers damage.
Your insurer may appraise your home to estimate the replacement cost or you may calculate it yourself. However, this cost does not stay the same because factors such as inflation can affect it. Therefore, you should try to keep up with market and labor trends to ensure that you have adequate coverage.
Conclusion
Dwelling coverage is key for adequate protection of a home. It protects the structural elements of your home such as your roof and walls. When a covered peril causes property damage, your insurer will reimburse you for the costs. This reduces the financial strain of paying for repairs or rebuilding out-of-pocket.
You should always thoroughly read your policy to understand the deductibles and limits. This will help you avoid denied or rejected claims. It will also help you make preparations for the types of perils that your dwelling coverage does not cover.
Dealing with insurance claims can be a serious hassle for any policyholder. You don’t need to deal with the frustrating claims process when you have a public adjuster. Reach out to On-Site Adjusting today for a smooth and efficient claims process.
