How to Choose the Right Dwelling Coverage Amount

Introduction

Choosing the right dwelling coverage amount is crucial for ensuring your home is adequately protected. Too little coverage leaves you at risk, while too much increases costs unnecessarily.

Understanding Dwelling Coverage

Dwelling coverage protects the structure of your home, including walls, roof, and built-in features, from covered perils.

Factors to Consider

When determining your dwelling coverage amount, consider:

Replacement Cost vs Market Value

Replacement cost is what it would cost to rebuild your home, which may differ from market value. Focus on replacement cost for insurance purposes.

Construction Costs

Current construction costs in your area affect replacement cost. These costs can change over time.

Home Features

Special features, finishes, and upgrades affect replacement cost and should be accounted for in coverage.

Local Building Codes

Rebuilding may require meeting current building codes, which can increase costs beyond original construction.

How to Calculate

Work with your insurance agent to calculate replacement cost based on:

• Square footage
• Construction type
• Local building costs
• Home features and upgrades

Key Takeaways

• Focus on replacement cost, not market value
• Account for construction costs and code requirements
• Review coverage annually
• Work with your agent for accurate calculations

Next Steps

Consult with a licensed insurance professional who can help you determine the appropriate dwelling coverage amount for your home.