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Dwelling Coverage Formula:
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Dwelling coverage is the part of your homeowners insurance that pays to repair or rebuild your home's physical structure if it's damaged by covered perils like fire, wind, or hail. It's one of the most important components of a homeowners insurance policy.
The calculator uses a simple formula:
Where:
Explanation: The 20% buffer (multiplying by 1.2) provides extra protection against construction cost overruns, debris removal, and other unexpected expenses that may arise during rebuilding.
Details: Having sufficient dwelling coverage is crucial to ensure you can fully rebuild your home after a total loss. Underinsuring your home could leave you with significant out-of-pocket expenses if disaster strikes.
Tips: Enter the estimated cost to rebuild your home (not its market value). This amount should include labor and materials at current local construction rates. Consult with contractors or insurance professionals for accurate rebuild cost estimates.
Q1: Why is dwelling coverage different from market value?
A: Market value includes land value and market conditions, while dwelling coverage only covers the cost to rebuild the structure itself, excluding land value.
Q2: Should I include my basement in the rebuild cost?
A: Yes, you should include all finished living areas, including basements, when calculating rebuild costs.
Q3: How often should I review my dwelling coverage amount?
A: You should review your coverage annually and especially after home renovations, as construction costs tend to increase over time.
Q4: Does dwelling coverage include detached structures?
A: No, detached structures like garages, sheds, or fences are typically covered under "other structures" coverage, which is separate from dwelling coverage.
Q5: What factors affect rebuild costs?
A: Square footage, construction type, local labor rates, materials quality, special features, and local building codes all impact rebuild costs.