Do you seek answers on how to calculate your dwelling coverage? If yes, ensure you read to the end of this comprehensive article. A lot of people often wonder how their dwelling coverage is calculated, worry less as we would help in unraveling the intricacies of dwelling coverage in order to give you a better understanding of what the coverage provides, what it does not, including insights on how to calculate your coverage.
Whether you are you are a new homeowner or you have owned a house for quite a long time, it is essential to have a profound understanding of dwelling coverage as this would help you in making informed decision later in the future. Read along as we provide valuable insights that would add to your wealth of knowledge about dwelling coverage.
What Is Dwelling Coverage?
Dwelling coverage, also known as, dwelling insurance is a type of coverage under a homeowner’s insurance policy that helps in rebuilding the home in the event of events such as, fire, explosions, lightning, vandalism and many more perils. This type of coverage is designed to help rebuild certain structures of your home if damaged by covered perils.
What Type Of Peril Is Covered By Dwelling Coverage?
Dwelling coverage provides protection against a wide rage of risk that can pose as threat to your home and its structures. Highlighted below are list of perils and hazards covered by dwelling cove rage;]
- Fire
- Hail
- Lightning
- Windstorm
- Heavy snow, sleet or ice
- Theft
- Vandalism
- Tornadoes
- Explosions
- Falling objects
Allow me to add that the exact type of coverage provided by this coverage largely depends on the type of policy you purchased and your coverage limits. If you seek extensive protection for your personal property, you can contact your insurance provider and inquire about the type of policy that provides maximum coverage and protection. You may need to opt for HO-5 policy.
What Is Not Covered By Dwelling Coverage?
Although, dwelling coverage offers protection for a wide range of perils, there are limitations to the number of risk it can cover. Here are common perils that are excluded in dwelling coverage;
- Earthquakes
- Flooding
- Neglect
- Intentional loss
- Power failure
- Nuclear hazard
- Pest infestations
- Mudslides
- Mechanical breakdown that causes property damage
- Damages caused by your pets
- Seizure or destruction of property by the government.
- Smoke damage
- Wear and tear
These are some of the common exclusions of a standard HO-3 home insurance policy. To get a better idea of what your policy covers and what it does not, you can check your policy documents or reach out to your insurance company for more information.
Who Needs Dwelling Coverage?
Dwelling coverage might not work for everyone but if you have a mortgage, it is a requirement to have dwelling insurance. The financial institution you took out the mortgage from will require you to have this type of insurance to ensure that their investment is adequately protected. Let’s say, your home gets destroyed or damage by fire or lightning, the dwelling coverage your bought will help to rebuild it based on the limit of your policy.
Regardless of whether or not you have a mortgage, dwelling coverage is one of the home insurance policy that homeowners should have. This is because it helps to cover the cost of repairing or rebuilding your home if a tragic event occurs.
How Is Dwelling Coverage Calculated
To calculate dwelling coverage, several factors are considered one of which is the location of the home. Most insurance companies today provide replacement costs estimated during the process of getting home insurance quotes. Once your home insurance policy is activated, your insurance provider will inspect your home to ensure it is insured by the right amount.
Insurance companies often make use of a formula that multiplies your home’s square footage by the current cost per square foot to build when determining how much your dwelling coverage would be. In addition to number of factors that contributes to how your dwelling coverage is calculated, your insurer will also consider the upgrades and other cost in your home.
You can as well do your own estimate through considering the interior features and built-in appliances in your home. It is advisable to request for a special replacement cost appraisal of your home in order to get a more accurate estimate. You can arrive at a correct estimate using an online replacement cost calculator.
FAQs
Does dwelling insurance cover earthquakes?
No, dwelling insurance does not cover earthquakes. If the structures of your home get damages by earthquakes, your policy will most likely not cover it. But if you seek coverage for ear quake related problems, you can get earthquake insurance policy for adequate protection.
What factors influence the calculation of dwelling coverage?
There are several factors that affect how your dwelling coverage is calculated. These factors include; construction materials, labor cost, home square footage, upgrades in the home and other special features such as garage or basement.
Is dwelling insurance and homeowners insurance the same?
Dwelling insurance is just a component of a standard homeowner’s insurance policy. Both are integrated into one. They provide coverage to homeowners if ever their home structure is damaged or destroyed by a covered peril. The two terms are often used interchangeably but homeowners insurance is more comprehensive. It includes other coverage such as liability protection and personal property. While dwelling insurance specifically covers physical structures of the home.
