What Is Dwelling Coverage?

Dwelling coverage is a component of your homeowners insurance policy that covers repair and rebuilding costs for your home's structure if it's damaged by a covered peril, such as a fire, tornado or falling tree. It usually includes the main building and any attached features, like a garage or deck.

Your policy includes a dwelling coverage limit, which is the maximum amount your insurer will pay toward rebuilding. This limit is typically based on estimated construction and labor costs, but it may become outdated if not reviewed regularly. If you’re concerned that your replacement value is too high, check your policy to ensure you’re not paying for more coverage than you actually need.

Dwelling coverage protects all structural elements, plus any structure considered to be attached to the home. For instance, home insurance covers HVAC systems and plumbing systems. Dwelling insurance typically includes coverage for your house's:

• Foundation
• Frame, flooring and windows
• Roofing
• Fireplace chimneys
• Plumbing, electrical and HVAC systems
• Built-in fixtures (cabinetry, bathroom sinks, tubs, showers, etc.)
• Built-in appliances (water heater, furnace, water filtration system, etc.)
• Attached garage
• Front or side porches
• Back deck
• In-ground swimming pool

Dwelling coverage protects your home from a wide range of risks (known as perils) that could cause physical damage to your property. These typically include fire, storms, and other sudden, unexpected events. Common perils covered by dwelling insurance include:

• Fire and smoke
• Windstorms, including hurricanes
• Hail
• Lightning
• Heavy snow, sleet or ice
• Tornadoes
• Sudden water damage (e.g., burst pipes)
• Explosions
• Falling objects, including from aircraft
• Vehicle impact
• Theft
• Vandalism and civil disturbance (e.g., riots or protests)

Your policy type determines how perils are covered. An HO-2 policy offers limited protection by covering only named perils, meaning damage is covered only if it’s listed in your policy. This often includes the perils above, plus:

• Volcanic eruptions
• Freezing of household systems
• Sudden power surges
• Cracking, burning or bulging of household systems

An HO-3 policy is the most common homeowners policy and offers broader coverage. It protects against all perils unless they’re specifically excluded, giving you more comprehensive protection.

Even the best homeowners insurance won’t cover every type of damage. Dwelling coverage excludes many hazards that are considered high-risk, gradual or preventable, and these gaps can leave homeowners vulnerable. Common exclusions from dwelling coverage include:

• Flooding
• Earthquakes
• Sinkholes
• Sewer backups
• Routine wear and tear
• Damage from falling trees with pest infestations
• Mudslides
• Damage by pests, such as termites
• Land erosion

You need enough dwelling coverage to fully rebuild your home if it’s destroyed, including the cost of materials, labor and construction. This amount is called your home’s replacement cost. Several factors affect how much coverage you need, including your home’s size, features and location.

We'll walk through how to estimate your rebuild cost, what influences that amount and how coverage works in special cases like condos or rental properties.

To set the right dwelling coverage limit, you need to know how much it would cost to fully rebuild your home. This is known as the replacement cost, which shouldn't be confused with your mortgage or the home's market value.

Most insurers use a replacement cost calculator that factors in your home’s size, materials, features and location. While these estimates are helpful, they may not fully reflect rising construction costs or inflation. That’s why many homeowners add extended replacement cost coverage or an inflation guard endorsement, which increases your payout by 25% to 50% if rebuild costs exceed your dwelling limit.

You’ll also need to decide how your policy handles payout values:

• Replacement cost value (RCV) covers the full cost to rebuild your home, without subtracting for depreciation.
• Actual cash value (ACV) reduces your payout based on your home’s age and condition, which could leave you underinsured, even though premiums are usually about 10% cheaper.

For full protection, some insurers offer guaranteed replacement cost coverage, which pays the entire rebuild cost no matter how high it goes. This option offers the most security but also comes with higher premiums.

Many specific factors affect the cost of rebuilding your home, including the materials found in your home, such as:

• Exterior façade: wood, brick or veneer
• Number of bathrooms
• Type of roof and roofing materials
• Interior features, including fireplaces, crown molding and custom cabinetry
• Current costs for new built-in appliances and household systems

Ask about current building codes that could increase the cost to rebuild your home from its original construction. Additionally, if you have an older or custom home with special features that could be difficult to replace or replicate, this will increase the amount of dwelling coverage you need.

If you own a condo, you don’t need traditional homeowners insurance, but you do need enough dwelling coverage to replace your unit if it’s damaged or destroyed by a covered peril. This is typically done through an HO-6 policy, which insures the interior of your condo and your personal belongings.

How much coverage you need depends largely on your homeowners association’s (HOA) master insurance policy. HOAs generally offer one of two types:

• Bare walls-in: Covers only the building’s exterior and shared structures. You’ll need an HO-6 policy that protects everything inside your unit, including floors, walls, cabinets, bathroom fixtures and built-in appliances.
• All-in: Covers both the building and interior fixtures like countertops, cabinets and bathroom sinks. In this case, your HO-6 policy would only need to cover personal property, such as clothing, electronics and furniture.

Even with an HOA policy in place, it’s important to understand how much of your unit it actually covers. If the building is destroyed, your coverage should be enough to fully replace your condo in the current market. An insurance agent can help you review the master policy and calculate the right coverage amount for your situation.

If you rent out your home, a standard homeowners policy likely won’t cover property damage. For this, you’ll need dwelling coverage designed for landlords. This specialized coverage protects the structure of your rental but not your tenant’s belongings. Renters should carry their own renters insurance policy for personal property protection.

When shopping for landlord insurance, look for policies that include:

• Protection against the same perils as standard dwelling coverage (e.g., fire, wind, vandalism)
• Coverage for your personal property used to maintain the rental, like appliances or lawn equipment
• Liability coverage for injuries tenants or guests incur on your property
• Coverage for lost rent when damage makes your property unlivable

Landlord policies generally cost around 25% more than regular homeowners insurance. To get the best rates, compare insurance quotes from multiple providers before choosing a policy.

Dwelling coverage financially safeguards your home's structure and attached features like garages, decks and porches from damage caused by covered perils. The amount of coverage you need should reflect what it would cost to fully rebuild your home today, not its market price. To stay properly protected, review your coverage regularly and consider add-ons if construction costs rise.

If you’re still sorting through the details of dwelling coverage, these common questions can help clarify what it does (and doesn’t) protect in a standard homeowners insurance policy.

MoneyGeek evaluates dwelling coverage using real-world data, pricing insights and independent analysis. We rely on homeowners insurance rate filings from state Departments of Insurance, along with premium data from Quadrant Information Services, to ensure our information is accurate and up to date.

How we reviewed dwelling insurance providers

To compare insurers, we analyzed premiums, policy features and available dwelling coverage limits. Our assessment included both standard policies and expanded options that offer extended or guaranteed replacement cost.

Home profile used for comparisons

All quotes were modeled using a consistent homeowner profile:

• Home built in 2000
• Wood-frame construction
• Composite shingle roof
• Credit score between 769–792

Coverage levels evaluated

Unless otherwise noted, all quotes reflect these default limits:

• $250,000 in dwelling coverage
• $125,000 in personal property coverage
• $200,000 in personal liability coverage
• $1,000 deductible

We also reviewed how insurers perform for higher-value homes using:

• $1 million in dwelling coverage
• $500,000 in personal property coverage
• $1 million in personal liability coverage

This process allows us to compare providers across a range of needs — from average homeowners to those seeking expanded structural protection.