What is Dwelling Coverage and Why Does it Increase Each Year?

First, let’s explain what dwelling coverage is.    The dwelling coverage refers to the main house and any other structures that are attached to it such as a garage or porch.  Dwelling coverage is important because you must buy enough to replace your home in the event it is destroyed.  Be aware that market value and rebuild cost are very different.  In most cases the rebuild cost will be much lower than what the actual amount you originally paid for your home. The original purchase price of your home included additional costs such as the value of the land.   The land is not taken into consideration in determining the actual dwelling value of your home  You also need to  make sure that if you have a pool or shed on your property, there is additional coverage for these “other structures on your property.  These are not generally covered under a primary dwelling policy.

Now, if you notice that your policy is increasing in price year over year, it is most likely because you have what is called inflation guard coverage.  Estimating the value of your home is not an exact science. Inflation Guard coverage ensures that you have fluctuation and minimize the possibility of being under insured at a time of a loss.. It bumps up the coverage amount specified in your policy declarations to cover your home.by a certain percentage.  This is done on an annual basis when your homeowner policy comes up for renewal. 

For more information or a quote on homeowners insurance, please contact a representative at AIS Insurance.

This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverages in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.