Home Insurance Dwelling Coverage & Your Mortgage Loan

What is dwelling coverage on your home insurance policy?

Dwelling coverage is what gives you coverage for your actual home, the actual structure of your home, the actual physical structure of your home. So on your home insurance policy you’re going to see something that says dwelling coverage limit. The dwelling coverage limit is the amount that it would take to rebuild your home if your home was completely destroyed.

Other Structures

Now, if there is any part of your home or any structure on your property that is not attached to your actual home, like a detached shed or a detached garage, that would not be covered under the dwelling limit, instead that would be covered under the other structures limits. So if you have anything big like that, make sure that you have enough other structures.

What Things Are Covered Under Dwelling Coverage?

So what are some common types of things that are covered under the dwelling coverage? Things that would happen to your home, such as fire, vandalism, explosion, smoke, things to that nature. But each policy is different so make sure to consult with your insurance agent, to make sure that you’re covered so that when something happens to your home, you’re covered.

Important Considerations

Two things that are important to point out. We are not insuring your home for what the sales price of your home would be. A lot of people say, oh, well, my home sold for 500,000, I need my dwelling coverage to be $500,000. Keep in mind the sales price of your home includes the land. We’re not insuring the land, we’re only insuring the dwelling. Again, consult with your insurance agent, make sure you have enough coverage, but you don’t want to have too much coverage.

The second thing, mortgage brokers, won’t like me for this- We are not insuring your home to cover the loan. A lot of mortgage brokers want to make sure that we cover the loan. That’s not the intended purpose of the dwelling coverage. The intended purpose of the dwelling coverage is to help rebuild your home in the event of a claim, this has nothing to do with the loan. Mortgage brokers don’t care about your dwelling, they care about the loan.  Make sure that you’re insuring your home for the correct amount, how much it would cost to rebuild the structure, the dwelling, if it were to burn down.

Again, guys, each policy is created different. Talk to your insurance company, talk to your insurance agent, make sure you have the right coverage.