Nerdy takeaways
- Dwelling coverage is the part of a home insurance policy that covers the structure of your house.
- Dwelling insurance can pay for repairs after events like fires and storms.
- You should buy enough dwelling coverage to completely rebuild your home.
Dwelling coverage is a crucial part of a homeowners insurance policy. If your house burns to the ground or a fallen tree crushes your roof, dwelling coverage would pay to help you repair or rebuild.
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Answer a few questions to see custom quotes and find the right policy for you. What is dwelling coverage for homeowners?
Dwelling coverage is the part of a homeowners policy that pays to repair damage to the structure of your home, or to rebuild it if it’s destroyed. Dwelling insurance is also known as Coverage A.
Your home’s structure includes the roof, foundation, floors, doors, windows and walls. Dwelling coverage also includes attached structures like garages, porches, decks and built-in appliances.
However, dwelling insurance doesn’t cover your belongings or any unattached structures. These elements fall under different parts of your policy.
Did you know...
The amount of dwelling coverage can help determine the limits in the rest of a homeowners policy. For example, other structures coverage is often set at 10% of your dwelling coverage limit. So if you have $350,000 of coverage for your dwelling, you’ll have $35,000 of coverage for detached structures like a shed or fence. What is dwelling coverage for condo owners?
In a condo insurance policy, dwelling coverage works differently. Most condo residents own only their own unit, not the building itself. For that reason, your policy’s dwelling insurance doesn’t need to cover things like the roof or outer walls. Your condo association likely has a master insurance policy that covers the structure of the building.
However, you may need dwelling coverage for built-in cabinets, appliances and floors within your unit. Exactly what you need to cover depends on what your association’s policy includes.
Here’s a quick glance at the three types of coverage your association might offer for built-in items:
| Coverage type | What your association covers | What you need to cover |
|---|---|---|
| All-in | All built-in fixtures, cabinets and flooring, plus upgrades you’ve made to your unit. | No dwelling coverage needed. |
| Single entity | Original built-in fixtures, but no improvements or changes you've made. | Upgraded fixtures, appliances and flooring. |
| Bare walls | Your unit's bare ceilings, walls and floors. | Flooring and carpets, built-in cabinets and appliances, wallpaper. |
In condo policies, dwelling coverage is sometimes called building property coverage. Learn more about condo insurance.
Is dwelling coverage required?
Though you’re not legally required to buy dwelling coverage, your lender will likely require it if you have a mortgage. This helps protect the lender’s financial investment, but it also protects your own. Imagine having to repay hundreds of thousands of dollars on a mortgage for a house that burned down, with no insurance money to rebuild it.
You may see a mortgage lender require hazard insurance, but don’t worry. That’s generally the same thing as dwelling coverage, and buying a homeowners policy will likely fulfill the requirement. (You may also need to buy flood insurance if you’re in a high-risk zone.)
If you don’t have a mortgage, you could go without dwelling coverage. But it’s not a wise idea unless you could afford to rebuild your home yourself after a catastrophe.
What does dwelling insurance cover?
Dwelling insurance covers a number of potentially damaging events, often called “perils” in your policy. Most homeowners policies cover your structure for any event that isn’t specifically excluded. This is known as “open perils” or “all risks” coverage.
You’ll typically have coverage for things like:
- Fire, lightning and smoke.
- Wind and hail.
- Vandalism.
- Freezing.
- Weight of ice or snow.
- Volcanic eruption.
- Explosions.
- Riots.
As long as your homeowners policy doesn’t exclude a given disaster, your dwelling insurance should cover it.
However, condo policies usually come with "named perils" coverage. That means they cover only scenarios specifically listed in your policy. Such scenarios usually include the ones listed above but not much else. For broader coverage, ask your agent if an open perils endorsement is available.
What does dwelling insurance not cover?
Even the best homeowners or condo policy won’t cover certain disasters, though you may be able to buy extra coverage. Here are a few examples.
Flooding
Say a hurricane pounds your area with rain or a nearby river overruns its banks. Your dwelling coverage usually won’t pay for any resulting water damage to your home. If your home is at risk, you can buy flood insurance through the federal government or a private company. See how to choose the best flood insurance.
Earthquakes and landslides
Home and condo policies generally won’t cover damage due to “earth movement” such as earthquakes, landslides or sinkholes. Your insurer may offer optional coverage you can buy for these disasters.
Water backup
Most home insurance won’t cover damage that results from a failed sump pump or a backed-up drain. If you’re interested in this coverage, you can typically add it via an endorsement to your policy. See our guide to water backup coverage.
Did you know...
An endorsement is an add-on to your policy. Insurance companies use endorsements to add or limit coverage or to change other terms of your policy. Maintenance or wear and tear
Insurance is designed to help with sudden accidents, not routine maintenance issues. Imagine your foundation cracks as it settles, or your roof starts leaking because it’s 20 years old. Your dwelling coverage is unlikely to help.
Infestations
Termites, rodents and other pests can do plenty of damage to the structure of your home, but your dwelling insurance probably won’t cover it. To insurers, pests are a maintenance issue that homeowners should expect to pay for themselves.
Vacancy
If you divide your time between homes, or you’ve got a house sitting empty while you’re waiting to sell it, you might not have as much coverage as you think. Many home insurance policies won’t cover certain types of claims such as vandalism if the house is vacant longer than 30 or 60 days. Learn more about unoccupied and vacant home insurance.
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Answer a few questions to see custom quotes and find the right policy for you. How much dwelling insurance do you need for a house?
Your dwelling coverage limit should be enough to rebuild your home if it’s destroyed. This amount isn’t the same as the price you paid for the house. Instead, this number depends on the features of your home and the building costs in your area.
You can get a rough estimate of your rebuilding cost by multiplying the square footage of your home by the average local building cost per square foot. Local builders and insurance agents may be able to help you find this figure. You can also use our home replacement cost calculator.
Every insurance company has a slightly different formula for calculating the replacement cost of your home. The more details you share about your home, the more accurate the estimate will be.
This cost may go up or down depending on the specifics of your home. For instance, do you have high-end fixtures and hardwood floors? They’d probably cost more to replace than carpets and laminate countertops.
In some cases, an insurance company may require a home insurance inspection to get a firsthand look at the features of your house.
Keep in mind that rebuilding costs can change over time. For example, building costs often go up due to high demand after a hurricane or other natural disaster. Recent inflation has also sent building costs skyrocketing. Such increases could leave you underinsured if you haven’t checked your dwelling coverage in a while.
What if you don’t have enough dwelling coverage?
Imagine you have $400,000 worth of dwelling coverage, but it ends up costing $475,000 to rebuild after a fire. You’d have to pay the extra $75,000 yourself.
Unfortunately, this isn’t a rare scenario. After the 2021 Marshall Fire in Colorado, 74% of affected homeowners were underinsured. Of those, more than a third were severely underinsured, meaning that they had less than 75% of the coverage they needed to rebuild. Survivors of other wildfires have encountered similar issues.
Underinsurance could be a problem even if your house isn’t destroyed. That’s because your insurance policy requires you to insure your home for at least 80% of its replacement cost in order to get full claim payouts. If you don’t have at least that amount of coverage, you’ll pay a coinsurance penalty.
Below is a comparison table showing how your insurer would pay a $60,000 claim for a fully insured house vs. one that doesn’t meet the 80% threshold. The home's replacement cost is $500,000 in all cases.
| Insured to value | Insured to minimum (80%) | Insured to 75% of minimum (underinsured) | |
|---|---|---|---|
| Dwelling coverage amount | $500,000 | $400,000 | $300,000 |
| How much of your claim is paid | 100% | 100% | 75% |
| Your final payout | $60,000 (minus your deductible) | $60,000 (minus your deductible) | $45,000 (minus your deductible) |
How to avoid being underinsured
To make sure your policy limits don’t fall short, consider adding one of the following:
Extended replacement cost coverage. This endorsement raises your dwelling limit by a certain percentage, such as 25% or 50%. Say your dwelling coverage limit is $300,000 and you have 125% of replacement cost coverage. Your dwelling coverage would pay up to $375,000 to rebuild your house.
Guaranteed replacement cost coverage. This endorsement is even more generous, paying whatever it takes to rebuild your home, with no fixed limit. Not all insurers offer this option.
Inflation guard. With this endorsement, your insurance company will adjust your coverage limits each year to keep up with inflation.
Ordinance or law coverage. Homeowners insurance pays to rebuild your home the way it was before. But what if the latest building codes require expensive upgrades? Ordinance or law coverage can help pay these costs.
🤓 Nerdy Tip
Beyond rising building costs, you might also need more dwelling coverage if you make improvements to your home. So if you renovate your kitchen or put on an addition, let your insurance agent know. How much dwelling insurance do you need for a condo?
Condo owners generally need less dwelling insurance than homeowners do because they don’t have to insure their roof or the outer structure of their building. (As noted above, the association’s master policy takes care of these.)
But you might need dwelling coverage for things like:
- Hardwood floors.
- Wall-to-wall carpeting.
- Bathroom fixtures.
- Kitchen cabinets.
- Built-in appliances.
Condo coverage varies from state to state and between communities. It can be tricky to make sure you have the right coverage for your condo without leaving any gaps. We recommend working with a knowledgeable agent to set up your policy.
How does dwelling coverage work?
Like other types of insurance, dwelling coverage is essentially a contract. As long as you pay your premiums, the insurance company will pay you if a covered event happens to your home.
The first step to getting a dwelling coverage payout is filing a claim. You may be asked to submit documentation of the damage, such as photos or video. The company may also send an adjuster out to see the home in person.
Any payout you receive will likely be subject to a deductible, the amount you’re responsible for paying. This may be a dollar amount or a percentage of your dwelling coverage. For example, if you have a $1,000 deductible and there’s $15,000 worth of damage to your home, your insurer would pay $14,000.
With a percentage deductible, what you pay for a claim would depend on how much dwelling coverage you have. So if your house is covered for $250,000 and you had a 1% deductible, you’d pay the first $2,500 of any claim.
🤓 Nerdy Tip
You may have different deductible amounts for different types of claims. For example, you might have a 2% deductible for wind and hail damage and a $1,000 deductible for all other claims. How coverage works for your roof
If your roof is damaged, your insurance company may not pay you enough for a brand-new roof. Some insurers cover older roofs for their actual cash value instead of paying for a full replacement. Here’s how that could work:
You paid $10,000 for your roof. It was designed to last 20 years, but after 10 years it suffers major damage in a hurricane. If you had replacement cost coverage on your roof, your insurance company would pay the full price of a new roof, minus your deductible.
But with actual cash value coverage, the insurer would pay only the depreciated value of your current roof. Because the roof is halfway through its expected lifespan, the insurer will deduct half the value. That would leave you with a smaller payout toward a new roof.
How much does dwelling coverage cost?
Dwelling coverage is just one section of a homeowners or condo policy. The average cost of homeowners insurance in the U.S. is $2,490 per year, according to NerdWallet’s rate analysis. That assumes dwelling coverage of $400,000. Here’s a list of average homeowners insurance costs for a range of dwelling coverage limits.
| Dwelling coverage amount | Average annual cost | Average monthly cost |
|---|---|---|
| $200,000 | $1,480 | $123 |
| $300,000 | $1,975 | $165 |
| $400,000 | $2,490 | $208 |
| $500,000 | $3,005 | $250 |
| $600,000 | $3,510 | $293 |
| $700,000 | $3,995 | $333 |
| $800,000 | $4,445 | $370 |
The average cost of condo insurance in the U.S. is $490 per year, according to NerdWallet’s rate analysis.
In general, the more dwelling insurance you need, the more your policy will cost. You may be able to save by choosing a higher deductible, bundling multiple policies or shopping around with several companies.
See which companies offer the cheapest home insurance.
Frequently Asked Questions
How do I know if I’m underinsured?
If you haven’t reviewed your dwelling coverage amount in a while, call your insurance agent. The agent can go over the features of your home and see whether your current coverage is enough. You can also try getting quotes from other insurers to see if they recommend a different amount. NerdWallet’s rebuilding cost calculator can give you a quick estimate, too.
Does dwelling coverage include your roof?
Dwelling coverage includes the entire structure of your home, including the roof. It will generally pay to fix or replace your roof if a fire, windstorm or other covered event damages it. However, your policy won’t cover ordinary wear and tear. If your roof starts wearing out after 25 years, you’ll need to pay for a new one yourself.
Why is my dwelling coverage so high?
Your dwelling coverage limit is based on how much it would cost to rebuild your home. Building costs have risen over the past few years due to inflation, worker shortages and supply chain problems. To save money, you can ask your insurer to reduce your dwelling coverage limit. But this could leave you underinsured if a fire or other disaster destroys your home. Find other ways to cut the cost of homeowners insurance.
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- 1. University of Colorado Boulder. Study Reveals Widespread Underinsurance Among Homeowners, Exposing Risk in the Wake of Devastating Wildfires. Accessed Jun 22, 2026.
- 2. United Policyholders. U.S. Homeowners Face Chronic Underinsurance as L.A. Wildfire Losses Mount. Accessed Jun 22, 2026.
