Dwelling coverage

The Coverage A line on your declarations page is the most the policy will pay to fix or rebuild the house itself. That number, the deductible beside it and the way the policy values a loss decide what a claim for fire, wind or hail damage to the structure is worth. It is one piece of homeowners insurance, which also carries coverage for other structures, belongings, loss of use, liability and medical payments.

How a dwelling claim is paid

The settlement method can change the check sharply. A roof example from the NAIC Post-Disaster Claims Guide (opens in a new tab) uses a $15,000 replacement cost and a $1,000 deductible, then shows the result under each method.

Under replacement cost, you carry the $1,000 deductible. Under actual cash value, depreciation and the deductible leave you $11,000 short. Both results assume the loss is covered and within the dwelling limit, and the figures are an illustration, not an average roof price or a standard depreciation schedule. The guide to replacement cost vs actual cash value goes further into the two methods.

Choosing the limit, the deductible and the add-ons

Most homeowners choices on a quote tie back to the dwelling limit.

• The dwelling limit. It should reflect the cost to rebuild, not market value, which includes land and moves with the real-estate market. If coverage falls below 80% of full replacement cost, the insurer may reduce a claim payment under the policy's settlement terms, according to the NAIC consumer's guide to home insurance (opens in a new tab). A higher limit raises the premium and the most available for a covered loss.
• Limits set as a percentage of Coverage A. The same NAIC guide gives typical figures of 10% for other structures, 50% for personal property and 20% for loss of use. On $150,000 of dwelling coverage, that is $15,000, $75,000 and $30,000, unless your policy sets different amounts.
• The deductible. A higher deductible generally lowers the premium and raises your share of each covered loss.
• Windstorm or hurricane deductibles. These commonly run 1% to 5% of the dwelling value or amount, according to the New York Department of Financial Services (opens in a new tab). On a $300,000 dwelling limit, 5% is $15,000, not $5,000.
• Extended or guaranteed replacement cost. Some insurers offer endorsements that add rebuilding protection above the base limit, on their own terms.
• Ordinance or law coverage. This pays extra costs that current building codes require, and in some states it is offered as a percentage of the dwelling limit.

Price changes depend on the insurer's filed rating plan, the location, construction, age, deductible, limits and endorsements. The guide to how much homeowners insurance you need covers setting the dwelling amount.

Where you'll see Coverage A

The term belongs to property policies. In HO-2, HO-3, HO-5 and HO-8 homeowners forms it is Coverage A, Dwelling. The ISO HO-3 form covers the dwelling and attached structures, plus materials on or next to the premises for building or repairing it, and states that land is not covered, per the ISO HO 00 03 form (opens in a new tab). In a condo HO-6 policy, Coverage A is generally limited to the parts of the unit and fixtures the condo documents make the owner insure. A renters HO-4 policy typically has no dwelling coverage; the landlord insures the building. Landlord and dwelling-fire policies (DP-1, DP-2, DP-3) and mobile-home HO-7 policies cover the structure under their own forms.

You'll find the limit, deductible and policy period on the declarations page, and the term also appears on quotes, binders, renewal notices, endorsements, claim estimates and claim letters. Exclusions and conditions in the policy form decide whether a particular loss is covered and how it is settled.

Connecticut and New York rules that affect a dwelling claim

Neither state sets a standard Coverage A amount. Connecticut expressly allows insurance that pays the amount actually spent to repair or rebuild above actual cash value under Conn. Gen. Stat. § 38a-313 (opens in a new tab). It bars declining, cancelling, nonrenewing or surcharging a policy based only on certain catastrophe claims, a prior owner's claims and some small or zero-payment claims under § 38a-316d (opens in a new tab). Cancellation notice is generally 10 days for nonpayment and 30 days for other permitted reasons under § 38a-316g (opens in a new tab), and renewals that reduce coverage require advance notice under § 38a-323 (opens in a new tab).

New York requires an annual notice that homeowners and dwelling-fire policies do not cover flood or mudslide and that NFIP flood insurance is available under N.Y. Ins. Law § 3444 (opens in a new tab). Hurricane deductibles follow Insurance Regulation 159 (opens in a new tab), issued under N.Y. Ins. Law § 3445 (opens in a new tab): the deductible applies only when a hurricane makes landfall in New York, applies to wind damage within a window of 12 hours before and 12 hours after, and must appear as a dollar amount on the declarations page.

Questions to ask your agent or insurer

These five questions get at what Coverage A will actually pay.

1. What is my Coverage A limit, and is it based on the cost to rebuild rather than market value? Market value includes land, which you don't need to rebuild.
2. Is the dwelling settled at replacement cost or actual cash value, and is any part, such as the roof, settled differently? Depreciation can cut a payment sharply.
3. What deductible applies to a dwelling loss, including any windstorm or hurricane deductible? A percentage deductible can be far larger than the ordinary one.
4. Which structures fall under Coverage A, and which under Other Structures? Attached structures generally sit in Coverage A, while detached garages, sheds and fences usually do not.
5. Are flood, earth movement and code upgrades covered, excluded or available by endorsement? Standard policies commonly exclude flood and earth movement.

Frequently asked questions

Short answers on what Coverage A includes.

Does dwelling coverage include furniture and clothing?

Usually not. Belongings generally fall under personal property coverage, often called Coverage C, which has its own limit. A renters policy works the same way for a tenant: it protects belongings and liability, not the landlord's building.

Does dwelling coverage pay for flood damage?

Standard homeowners and condo unit-owner policies generally exclude flood, and earth movement is another common exclusion. Flood protection comes from a separate policy, such as one through the NFIP.

Does replacement cost coverage remove the deductible?

No. The deductible still comes off the payment, even when no depreciation is subtracted. On a $15,000 covered repair with a $1,000 deductible, the payment is $14,000 before any other policy limit applies.