Coverage explainer
How much dwelling coverage do I need?
Enough to rebuild your house. Not what you paid for it, not what your lender requires, not what Zillow says it's worth. Just rebuild cost — and after 40%+ construction inflation since 2019, most homeowners are wildly underinsured.
2026 reality check: the average homeowners policy is insured at the 2018–2019 rebuild cost. Construction costs are up 40%+ since then. If you haven't re-evaluated your Coverage A in 3+ years, you almost certainly need a higher limit.
The right number = rebuild cost, not market value
Dwelling coverage (Coverage A) pays to rebuild the physical structure of your home after a covered loss. The math is construction-only: foundation, framing, mechanical, roof, finishes, labor, permits. Land doesn't burn. Neighborhood demand doesn't burn. School district doesn't burn. None of those belong in your dwelling limit.
In high-cost-of-living areas market value is often 2× rebuild cost. In rural areas the opposite is true — rebuild cost can exceed market value because labor and materials still cost the same, while the home's resale value is depressed by location.
2026 rebuild cost per square foot (rough guide)
Multiply your finished square footage (include finished basement, exclude garage and unfinished basement) by the appropriate $/sqft to get a ballpark. For a precise number, use the calculator — it factors in stories, basement, and garage.
| Region | Basic / tract | Standard | Custom |
|---|---|---|---|
| Low-cost metros (Midwest, parts of South) | $140–$180 | $180–$240 | $240–$340 |
| Mid-cost metros (TX, NC, GA, FL) | $170–$220 | $220–$290 | $290–$400 |
| High-cost metros (CO, AZ, NV, UT) | $200–$260 | $260–$340 | $340–$480 |
| Very high-cost (CA, WA, NY, MA, HI) | $260–$340 | $340–$450 | $450–$650+ |
Per finished sqft, dollars. Excludes land. Custom = high-end finishes, complex roof, architect-designed. Luxury exceeds these ranges.
Check if you're underinsured in 60 seconds
- 1. Pull your declarations page. Find Coverage A (sometimes labeled "Dwelling").
- 2. Divide Coverage A by your home's finished square footage.
- 3. Compare against the table above for your region and construction quality.
- 4. If you're below the "basic" column, you're definitely underinsured. If you're below "standard" on a standard home, you're likely underinsured.
- 5. Call your agent and request a replacement cost estimate using a tool like 360Value or MSB. The agent can pull this in 5 minutes.
The 80% coinsurance trap
Most homeowners policies have an 80% replacement-cost provision: insure to at least 80% of full replacement cost or get a reduced payout on partial losses.
Example
Full replacement cost: $500,000. You're insured at $300,000 (60% of replacement). You have a $40,000 partial loss from a kitchen fire.
Instead of paying $40,000 − deductible, the carrier pays only $30,000 − deductible (because 60/80 = 75% × $40,000). You eat the $10,000 + deductible difference on what should have been a fully-covered partial loss.
Extended replacement cost (ERC) vs guaranteed replacement cost (GRC)
ERC adds a buffer (typically 25%–50%) above your Coverage A for cost overruns — useful for inflation between policy renewal and the loss. GRC pays whatever the rebuild actually costs with no cap, but is rare since the California wildfires.
Important: ERC is not a substitute for accurate Coverage A. The buffer is for surprises (a wildfire that causes regional labor shortages, materials spiking 30% in 6 months) — not for starting underinsured. Your base Coverage A still needs to match rebuild cost.
When to recalculate
- • Annually at renewal — verify the inflation adjustment is keeping pace
- • After any renovation that adds value: kitchen/bath remodel ($25k+), addition, finished basement
- • After any year of high construction inflation (2021, 2022, 2023 all saw 8–15% jumps)
- • After a major appliance/system upgrade: HVAC replacement, solar, new roof, generator
- • When changing carriers — never let the new carrier just copy the old limit
Want the exact number?
Use our dwelling coverage calculator — it factors in square footage, region (by ZIP), stories, basement, garage, and construction quality. Or upload your declarations page and we'll flag underinsurance plus any missing endorsements (ordinance & law, ACV roof, percentage deductibles) in one report.
Frequently asked
How much dwelling coverage do I need?
Enough to fully rebuild your home from the foundation up using current labor and materials in your area. As of 2026, that's typically $200–$450/sqft depending on region, finishes, and construction quality. A 2,200 sqft home in a high-cost metro (Denver, Seattle, NYC suburbs) typically needs $550k–$900k of dwelling coverage. Don't use market value — that includes land, which doesn't burn down.
How do I know if I'm underinsured on my home?
Compare your declarations page Coverage A limit against current rebuild cost per square foot in your area. If your Coverage A divided by your finished square footage is below $200/sqft for a tract home or below $300/sqft for a custom build, you're almost certainly underinsured. Construction costs are up 40%+ since 2019 — most policies haven't kept pace.
What happens if I'm underinsured on my home?
Two things hurt you. On a total loss, the carrier pays your Coverage A limit and you cover the rest out of pocket — even with extended replacement cost endorsements, which usually cap at 25–50% above the limit. On a partial loss, the 80% coinsurance clause kicks in: if you're insured for less than 80% of replacement cost, the carrier reduces your partial-loss payout proportionally. Both are recoverable only by fixing the limit before the loss.
Is dwelling coverage the same as market value?
No, and this is the most expensive misconception in homeowners insurance. Market value includes land, neighborhood demand, school district, and views — none of which burn down. Rebuild cost is the construction-only number: foundation, framing, mechanical, finishes, labor, permits. In high-cost-of-living areas market value is often 2× rebuild cost; in rural areas rebuild cost can exceed market value.
What is the 80% coinsurance rule in homeowners insurance?
Most homeowners policies have an 80% replacement-cost provision: you must insure your home to at least 80% of its full replacement cost to receive replacement-cost settlement on partial losses. If you're under 80%, the carrier pays only the proportional share. Example: full replacement is $500k, you're insured for $300k (60%), and you have a $40k partial loss. Instead of paying $40k − deductible, the carrier pays $30k (because 60/80 = 75%) − deductible.
What is extended replacement cost vs guaranteed replacement cost?
Extended replacement cost (ERC) pays 25–50% above your Coverage A limit if rebuild exceeds the limit after a covered loss. Guaranteed replacement cost (GRC) pays whatever the actual rebuild costs, with no cap. GRC is rare — most carriers stopped offering it after the 2017–2018 California wildfires. If you have ERC, your Coverage A still needs to be accurate; the 25–50% cushion is for cost overruns, not for being underinsured at policy start.
How much dwelling coverage for a condo?
For a condo (HO-6 policy), Coverage A only covers what's 'inside the walls' — your unit's interior finishes, cabinets, flooring, and improvements. The condo association's master policy covers the building structure. Most HO-6 owners need $20k–$100k of Coverage A depending on unit size and finish quality. Check the association's master policy first — is it 'bare walls,' 'single entity,' or 'all-in'? That determines how much you need.
How often should I update my dwelling coverage?
Every year at renewal, and immediately after: a renovation that adds square footage or value, a kitchen/bath remodel ($25k+), an addition, a finished basement conversion, or a year of significant construction inflation (2021, 2022, 2023). Most carriers apply a small annual inflation adjustment automatically, but it's usually 2–4% — well below the 8–15% annual construction cost increases of recent years.
Will my mortgage lender's required amount cover me?
Probably not. Lenders typically only require dwelling coverage equal to the loan balance, which has nothing to do with rebuild cost. If you owe $250k on a home that costs $500k to rebuild, the lender is satisfied but you're 50% underinsured. Lender requirements protect the lender, not the homeowner.