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Dwelling Coverage Formula:
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Dwelling coverage is the part of a homeowners insurance policy that helps pay to rebuild or repair the physical structure of your home if it's damaged by a covered peril. It typically covers the main house structure and any attached structures.
The calculator uses the dwelling coverage formula:
Where:
Explanation: This calculation determines the amount of coverage needed to adequately protect your home's structure in case of damage or destruction.
Details: Proper dwelling coverage ensures you have adequate protection to rebuild your home after a covered loss. Underinsuring can leave you financially vulnerable, while overinsuring means you're paying for coverage you don't need.
Tips: Enter your home's estimated replacement value (not market value) and the dwelling rate percentage provided by your insurance company. Both values must be positive numbers.
Q1: What's the difference between dwelling value and market value?
A: Dwelling value is the cost to rebuild your home, while market value includes the land value and factors like location desirability.
Q2: How is the dwelling rate determined?
A: Insurance companies determine rates based on factors like construction type, location, age of home, and local building costs.
Q3: Should I include land value in dwelling coverage?
A: No, dwelling coverage should only cover the cost to rebuild the structure, not the land it sits on.
Q4: How often should I review my dwelling coverage?
A: Annually, or after any major home renovations, as construction costs and home values change over time.
Q5: Does dwelling coverage include detached structures?
A: Typically, detached structures like garages or sheds require separate coverage, though some policies may include limited coverage.