Determining the appropriate amount of dwelling coverage needed is a vital component of safeguarding your home and guaranteeing financial stability in the event of unplanned calamities. One of the vital components of homeowners insurance is dwelling coverage, which protects the physical structures of your home from a variety of hazards like fire, theft and natural disasters. Perhaps, you are wondering ‘How much dwelling coverage do I need?’, worry less, we have all the answers to your questions.
Determining the exact amount of coverage you require can be daunting at time because it depends on a number of factors such as, value of the home, cost of construction and other special features that can potentially raise the cost of rebuilding your home.
Notwithstanding, this article aim to explore the key factors to take into account when figuring how much dwelling coverage is needed for your home. Whether you are a first time homeowners or you intend to reassess your existing policy, understanding dwelling coverage is essential.
What Is Dwelling Coverage?
Dwelling coverage is one of the most essential components of a homeowners insurance policy. This type of coverage offers protection to policyholders if the structure of their home gets damaged by certain perils such as theft, vandalism, fire, and other natural disasters.
Your dwelling coverage covers expenses for repairing and rebuilding some structures in your home if it gets burned or got damaged by another other type of risk covered under your policy.
Is Dwelling Insurance Required?
While it is not mandatory to buy this type of coverage, you will likely need to purchase one if you have a mortgage. This is to protect the investment of the bank or financial institution you took out the mortgage from. It also serves as a form of financial protection if an unforeseen event like fire or explosion occurs. Having dwelling insurance during this event means that, the expenses related to rebuilding your home will be catered to by your insurance company.
Common Perils Covered By Dwelling Insurance
Dwelling coverage is one of the type of insurance we often recommend to homeowners and first time homebuyers because of the wide range of benefit it offers. Here are some of the general perils covered by dwelling insurance;
- Fire
- Hail
- Volcanic eruption
- Lightning
- Windstorm
- Heavy snow, sleet or ice
- Theft
- Vandalism
- Tornadoes
- Explosions
- Falling objects
Perils Not Covered By Dwelling Insurance
Yes, dwelling coverage offers protection for a wide range of risk but it still does not dispute the fact that there are limitations to what the policy covers. There are certain types of perils that are not covered by dwelling insurance, such as;
- Earthquakes
- Flooding
- Neglect
- Intentional loss
- Power failure
- Nuclear hazard
- Pest infestations
- Mudslides
- Mechanical breakdown that causes property damage
- Damages caused by your pets
- Government action such as, seizure or destruction of property.
- Smoke damage
- Wear and tear
How Much Dwelling Coverage Do I Need?
Typically, the right amount of dwelling coverage you need depends on the cost of rebuilding your home. The cost of rebuilding your home is one of the key factors that determine how much dwelling coverage you will need. To do this, it is advisable to make research on the current cost for materials, labor, as well as construction cost. This will help you arrive at an estimate and with this; you can seamlessly make a decision on the amount of coverage that suits your need.
You can also check your homeowner’s insurance policy to find out how much coverage for dwelling you already have and reassess the need of your home to determine how much more you need to add to it.
How Much Does Dwelling Coverage Cost?
The cost of dwelling insurance is determined by several factors which your insurance company will consider before telling you how much you pay for the policy. Enumerated below are common factors that can influence the cost of your dwelling coverage;
- Cost of rebuilding your home.
- The coverage on your policy.
- The type of policy limit you select.
- The age of your home.
- Your claim history.
- The materials in your home such as, wood or stones..
Furthermore, your insurance provider will also consider the claim history in your area as well as fire ratings. These and many are factors that determine the cost of dwelling insurance for homeowners.
FAQs
Can I increase my dwelling coverage at any time?
Of course, you can! If you realize that your coverage is too little and there are other perils you wish to be protected against, you can contact your insurance provider and ask them to increase your coverage. Please, note that, increasing your dwelling coverage adversely has an impact on your premium as it is likely to go higher.
How can I be sure I have the right amount of dwelling coverage?
If you are still unsure about whether you have the right coverage for your home, you can contact an insurance agent. They are in the best position to help in assessing your personal needs and that of your home, as well as providing valid advise on the amount of coverage you need. You can also get a profession appraisal to get an accurate estimate of the replacement cost of your home.
Does dwelling coverage cover floods?
No, dwelling insurance does not cover flood. In a situation where the structures and other personal belonging in your home is damaged by flood, your flood insurance policy will cover all related expenses. If you don’t have flood insurance and you seek coverage for flood-related issues, you can purchase one directly from an insurance company.
