Dwelling coverage covers physical damage to your home, its structure and anything else deemed part of the dwelling. The term itself does not say which losses are covered, what terms apply or the limits.
For this update, our editors reviewed the federal home-insurance guide, the federal disaster-insurance guide, Insurance Bureau of Canada’s home-coverage guide, and IBC’s water-damage guide. Your policy and water-damage riders define coverage, so check the declarations page before a loss.
What Is Dwelling Coverage in Home Insurance?
Your declarations page lists the dwelling coverage limit.
Dwelling coverage doesn’t apply to all possible causes of damage to your home. Refer to the policy for what’s included in dwelling coverage, applicable perils, exclusions and deductibles, how losses are figured, conditions of coverage and more. Endorsements may be added to change your coverage.
What Exactly Counts as the “Dwelling” of Your Home?
| Property | Where it is often classified | What to verify |
|---|---|---|
| House and attached garage | This is usually classified as dwelling or building. | Additions, completed spaces and attached structures should be included in the rebuild description. |
| Built-in systems and fixtures | Dwelling or building | Heating, plumbing, electrical, cabinetry and other permanently installed finishes |
| Detached garage or shed | Detached private structures and outbuildings | Check its separate limit, permitted use and any rented or business occupancy. |
| Furniture, clothing and electronics | Personal property, also called contents | Check replacement-cost terms, sublimits and items that must be scheduled. |
| Fence, deck, pool or landscaping | Depending on wording, this may be dwelling, other structures, outdoor property or have a special limit. | Check exclusions or sublimits for storm, weight of snow, water and equipment. |
| Condo unit components | Part is under the corporation’s policy and part is under the unit owner’s policy. | Check the standard-unit definition, improvements, corporation’s deductible and loss assessment. |
Read More: Compare Broad and Comprehensive Home Insurance
How Water-Damage Coverage Can Vary
| Water event | How to check it |
|---|---|
| Sudden escape from indoor plumbing or an appliance | Often addressed in a standard form, but maintenance, freezing and vacancy conditions can change the result. |
| Sewer or drain backup | Usually needs a sewer-backup endorsement. Check the limit, deductible and whether sump- pump failure is included. |
| Overland water | Usually needs optional flood or overland-water coverage. Availability, limit and deductible vary by location and insurer. |
| Groundwater, seepage or repeated leakage | Treatment varies and can remain excluded even when other water protection is present. |
| Coastal storm surge or tidal water | IBC says these events are typically excluded from most home policies and optional endorsements. |
Earthquake coverage is commonly offered as an option. If you have this endorsement, find out whether it will pay for damage to your home and belongings, plus additional living expenses. Ask how the deductible is figured out, as a dollar amount or a percentage.
Read More: Compare Overland Water Coverage and Flood Insurance
How Much Dwelling Coverage Do You Really Need?
Use your insurance company’s reconstruction estimates, not tax assessment, resale or market values, mortgage amount, or what you paid for your house.
Factors affecting reconstruction value include labour, materials, accessibility, home size, type of construction, mechanical systems and finishes.
Be aware of additional expenses associated with rebuilding, such as demolition and debris removal, professional fees and code increases, and whether these costs are included in the dwelling coverage limit or have separate/additional coverage.
Notify your insurer if reconstruction value is more than the dwelling coverage amount before a loss occurs.
Just because your declarations page shows dwelling coverage of $600,000 doesn’t mean you’ll automatically receive a check for $600,000 in the event of a loss. Losses are subject to policy terms such as conditions, basis of settlement and insurance-to-value provisions; coverage, including covered causes of loss and deductibles; the extent of damage; and limits.
The federal guide lists some of the conditions you must meet for a guaranteed building replacement payment that could exceed dwelling coverage in the event of a covered total loss. These conditions include carrying dwelling coverage for the full amount of your insurer’s reconstruction estimate, notifying your insurer of improvements that increase dwelling reconstruction value, and rebuilding at the same location.
Replacement cost, extended replacement cost and guaranteed replacement cost are different types of coverage with varying levels of protection.
Read More: See How Home Value Relates to Home Insurance Cost
Dwelling Coverage vs. Other Parts of Your Policy
| Coverage part | Main purpose | Limit question |
|---|---|---|
| Dwelling | Dwelling coverage pays for repairing or rebuilding damage covered by your policy to your primary residence, including permanent fixtures. | Is your dwelling coverage limit current? What conditions apply to replacement under the policy? |
| Detached structures | Parts of your insurance policy that aren’t dwelling coverage can pay for damage to structures on your property that are separate from your house. | How much coverage do you have for an outbuilding, such as a garage or shed, and is it adequate? |
| Personal property | Other parts of your policy cover losses to your personal belongings. | Are there limits for certain items, some of which must be scheduled? Is settlement based on replacement cost or actual cash value? |
| Additional living expense | Certain additional costs are covered by other parts of your policy if an insured loss renders your home unliveable. | How are claims handled? What costs are covered? Who pays them? |
| Personal liability | Other parts of your policy protect against liability for bodily injury to third parties or damage to their property. | What limits, exclusions and defence terms apply? |
Read More: Learn How Replacement Cost Differs From Actual Cash Value
Declarations-Page Walkthrough
- Review the declarations page. Make sure all information is correct and applicable, including the named insured, address, occupancy and mortgagee, if applicable. The mortgagee doesn’t add coverage but affects how a claim is paid.
- Review dwelling, other structures, contents, additional living expenses and liability limits. Some limits may be defined as a percentage of other limits.
- Review endorsements. Make sure you have wording for all endorsement numbers listed. Look for endorsements such as overland water, sewer backup, earthquake, service line, equipment breakdown and guaranteed or extended replacement.
- Review deductibles, including any percentage deductibles and earthquake, wind or water deductibles.
- Review exclusions, settlement clauses and other conditions. The declarations page is not the full policy. It is a summary of limits and endorsements.
Practical Next Steps
Save copies of building permits, plans, invoices and photos to help your insurer adjust your policy to accommodate changes to your limits and usage. Review your rebuild descriptions annually or ahead of any significant renovations.
Let your insurer know about renovations or improvements, additions, a finished basement or new outbuildings. Let your insurer know about changes to occupancy, renting, home-based businesses or a vacant house.