What Is Dwelling Insurance and What Does It Cover?

Dwelling insurance focuses on protecting the physical structure of a building, including its roof, walls, and foundation. It provides financial safeguards against damage, helping to repair or rebuild the property after a covered loss.

Core Coverage

Dwelling insurance protects the physical structure of a home, including its roof, walls, and foundation. It also extends to structures permanently attached to the main building, such as an attached garage, a deck, or a screened-in porch.

This protection covers damage caused by specific perils. Common perils include fire, smoke, lightning strikes, windstorms, hail, explosions, vandalism, and theft.

Coverage also extends to damage from falling objects like trees, or from the weight of snow, sleet, or ice. Accidental damage caused by vehicles or aircraft impacting the structure is also covered.

The policy helps pay for the rebuilding or repair of the home’s structure if damaged by a covered hazard. The coverage limit is based on the estimated cost to rebuild the home with similar materials.

Key Exclusions and Limitations

Dwelling insurance has specific exclusions and limitations. A key distinction from standard homeowners insurance is the exclusion of personal property coverage. Unlike homeowners policies, dwelling policies do not cover furniture, electronics, clothing, or other movable items.

Personal liability coverage is another exclusion. This protects the owner if someone is injured on the property or if the owner accidentally causes damage to someone else’s property. Dwelling insurance focuses on the building itself, and this coverage is not included unless added by endorsement. Detached structures like sheds, fences, or detached garages are also not covered. These require separate “other structures” coverage, often part of a homeowners policy.

Certain perils are excluded from standard dwelling policies. Floods, for instance, are excluded and require a distinct flood insurance policy. Damage from earthquakes, landslides, and other earth movements is also not covered, requiring specialized earthquake insurance.

Damage from neglect, wear and tear, or lack of maintenance is excluded. This includes mold, rot, and pest infestations. Water damage from sewer backups or sump pump overflows is another exclusion, often requiring a specific endorsement. Intentional damage caused by the insured is not covered, and structures used for business purposes may also be excluded.

Types of Dwelling Policies

Dwelling insurance policies are categorized into different forms: DP-1, DP-2, and DP-3. These forms determine the extent of protection and how claims are settled.

The DP-1, or Basic Form, provides the most limited coverage, operating on a “named perils” basis. It only covers damage from perils specifically listed, such as fire, lightning, and internal explosions. Claims are settled at Actual Cash Value (ACV), meaning depreciation is factored into the payout.

The DP-2, or Broad Form, is also a “named perils” policy but includes a more extensive list of covered events than the DP-1. It covers incidents like vandalism, malicious mischief, damage from the weight of ice and snow, falling objects, and accidental discharge of water or steam. For the dwelling and other structures, claims are settled at Replacement Cost Value (RCV), meaning depreciation is not deducted.

The most comprehensive option is the DP-3, or Special Form, which provides “open perils” or “all-risk” coverage for the dwelling and other structures. This means the policy covers all causes of damage unless a specific peril is explicitly excluded. Personal property within the dwelling is still covered on a “named perils” basis, similar to a DP-2 policy.

Claims for the dwelling and other structures under a DP-3 policy are settled at Replacement Cost Value, providing the full cost to rebuild or repair without considering depreciation. This form also has exclusions, such as floods or earthquakes, which are not covered unless added by endorsement.

Who Needs Dwelling Insurance

Dwelling insurance is for property owners whose circumstances do not align with a standard homeowners policy. This includes landlords who own rental properties. Standard homeowners policies are for owner-occupied residences and do not cover homes where the owner does not reside. Landlords need dwelling insurance to protect the physical structure of their investment property, as their personal belongings are not present, and tenant liability is covered by the tenant’s renters insurance.

Owners of vacant homes also benefit from dwelling insurance. A property unoccupied for an extended period faces increased risks like vandalism, theft, and undetected damage from burst pipes. Standard homeowners policies limit or exclude coverage for vacant homes, making a dwelling policy necessary to protect the structure.

Properties undergoing renovation, especially if unoccupied during construction, also need dwelling insurance. While some homeowners policies offer limited coverage for minor renovations, extensive projects require a dwelling policy or a “dwelling under renovation” endorsement. This protects the structure against perils and addresses construction risks like theft of materials or increased liability.

Owners of seasonal or secondary homes not occupied year-round may also find dwelling insurance suitable. These properties do not meet the full-time occupancy requirements of a standard homeowners policy. Dwelling insurance provides the structural protection needed for these non-owner-occupied dwellings.