Dwelling Coverage

The first line in your declarations page or the quote you receive from an insurance provider will most likely be Dwelling.

Dwelling is probably the simplest portion of your policy but if overlooked this coverage could cost you a fortune!  To put it simply, if you experienced a total loss of your home due to a covered peril (i.e. Fire) this would be the amount the insurance company would pay to rebuild your home from the ground or foundation up and may include other costs such as debris removal.  Please note the word rebuild, this coverage in most circumstances does not mean buy another home.

However, most of the time the amount of coverage requested is the purchase price of the home.  Using the purchase price of a home is never a good idea, though in some markets due to the market conditions the reconstruction cost of their home may be fairly close to the market value.  I should also point out here that there are two types of valuation methods used on home policies, Actual Cash Value (ACV) and Replacement Cost (RC).  This is important when comparing insurance policies and in today’s market RC is the most common, but you will still find some ACV policies out there, it just depends on the type of policy and who it is written through.

There are several methods and companies that can help with estimating the replacement cost of your home, just ask your insurance agent how the amount on your policy was determined at your next annual review.  If you don’t think you have enough or are unsure, don’t wait call and find out today.