Dwelling coverage, both as part of your homeowners policy and on its own, covers the physical structure, the “dwelling,” of your property in the event it’s damaged by any sort of covered peril. Most standard home insurance policies define your dwelling as your home and any structures attached to it, such as a garage or porch.

If you only have dwelling coverage for your property, that means only the structure of your home is covered in the event of damage, not any personal belongings within the house. You also don’t have personal liability coverage, meaning you aren’t protected from lawsuits in the event someone is injured on your property.

What does dwelling coverage cover?

Dwelling coverage covers all perils that are outlined in your homeowners insurance policy that may harm the structure of your home. Standard homeowners insurance policies generally have fire, lightning, windstorms, hail, theft, and water damage as covered perils. If any of these cause damage to your home and you purchased dwelling coverage, you’ll receive payment to rebuild it, up to the amount of dwelling coverage you bought.

As a rule of thumb, dwelling coverage should be purchased up to the amount it would cost to rebuild your entire home. If your home is destroyed in a hurricane, for instance, and you didn’t purchase enough coverage to rebuild, you’d be left to pay the difference out of pocket. Homeowners who have trouble getting a standard homeowners insurance policy due to poor credit, poor condition of their home or other reasons, may be able to purchase owner-occupied dwelling insurance.

What doesn’t dwelling coverage cover?

Dwelling coverage alone doesn’t cover any personal items within the home. Even though dwelling coverage does protect against theft, it only covers damage that may be done to your property by a burglar, like a broken window, not anything that is stolen. Dwelling coverage also doesn’t cover detached structures, such as a shed. Dwelling coverage, when included in your homeowners policy or purchased separately, also doesn’t cover damage caused by floods or earthquakes. You’ll need to buy separate flood insurance or earthquake insurance to protect your home from these perils.

Personal liability insurance isn’t included in dwelling coverage, so if someone is injured on your property, you’re liable as the owner and could potentially be sued. Policyholders who own a vacation home and rent it out part of the year should definitely consider, and may be required, to purchase personal liability coverage in addition to dwelling coverage. Dwelling and liability coverage may be packaged as landlord insurance by some insurance companies.

Dwelling insurance is one way to save money on insurance for those who own multiple homes or rental properties. While it covers the most important aspect of your property, which is the structure itself, it has significant lapses in coverage in other important areas.

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