Coverage explainer
Dwelling coverage vs market value.
The most expensive misunderstanding in homeowners insurance: confusing what you'd sell your home for with what it would cost to rebuild it.
Dwelling coverage (Coverage A on your declarations page) pays to rebuild your home's structure after a covered loss. It doesn't insure the land, the neighborhood, the school district, or any of the other things that make up market value.
That means a $700,000 home in a hot suburb might only need $400,000 of dwelling coverage. And a $250,000 home in a depressed-market town with rising construction costs might need $325,000 of dwelling coverage to rebuild. Same word, very different number.
Market value
What a buyer pays today. Includes land, location, and market timing.
Replacement cost
What it costs to rebuild the structure at current local labor and material rates.
The gap
Construction costs are up 40%+ since 2019. Most policies haven't kept pace.
See your rebuild gap in 60 seconds
Our dwelling coverage calculator benchmarks your current limit against rebuild costs in your zip code.
Open the calculatorFrequently asked
Should dwelling coverage equal market value?
No. Dwelling coverage should equal the cost to rebuild your home from the ground up at current local construction prices — not what a buyer would pay for the home today. Market value includes land, location, and market conditions; rebuild cost does not.
Why is my dwelling coverage higher than my home's value?
In some markets — older neighborhoods, areas with declining property values, or homes with custom finishes — replacement cost legitimately exceeds market value. You're paying to rebuild the actual structure, including materials and labor, not buying a new home off the MLS.
What happens if my dwelling coverage is too low?
Two things: (1) the carrier pays only up to your limit on a total loss, leaving you to fund the rest of the rebuild, and (2) for partial losses, a coinsurance penalty can apply if you're insured below 80% of replacement cost — reducing every claim payout proportionally.
How do I calculate the right dwelling limit?
Three approaches: (1) ask your agent to run a current replacement-cost estimator (Marshall & Swift or e2Value), (2) use 'cost per square foot' for your zip code multiplied by square footage, or (3) upload your dec page and we'll benchmark your limit against current rebuild costs in your area.
Does dwelling coverage include the land?
No. Land cannot be destroyed, so insurers don't cover it. This is the single biggest reason dwelling coverage should be lower than market value for homes on expensive lots — and higher than market value for homes in cheap-land/expensive-build markets.