Dwelling Insurance

When you own a home that you don't live in most of the time, an alternative to homeowners insurance that may make sense for you is dwelling insurance. This coverage is more limited than full home insurance, but it may provide exactly what you need. However, it's critical to understand the differences in policies first.

An independent insurance agent can help you get set up with all the homeowners insurance or dwelling insurance you're looking for. They'll make sure you get the right type of coverage for your property. But first, here's a behind-the-scenes look at dwelling insurance and when and why you might choose it.

What Is Dwelling Insurance?

Dwelling insurance is a type of policy that covers the structure of a home and often additional structures that are directly attached to it. This can include a porch or deck, an attached garage, etc. A dwelling policy is also often referred to as second home insurance or dwelling fire insurance.

What’s the Difference Between Dwelling Insurance and Home Insurance?

Home insurance and dwelling insurance may seem the same at first glance, but they’re used for different situations. The primary difference is that while home insurance is designed to protect your primary residence, a dwelling fire policy is meant to cover structures you don't live in most of the time. Knowing when you'd want to select dwelling coverage vs. homeowners insurance is key.

Homeowners insurance vs. dwelling insurance:

While dwelling coverage is included in your standard homeowners policy, most people use separate dwelling fire insurance to provide coverage for a second home that they own but do not occupy. 

What Does Dwelling Insurance Cover?

Dwelling insurance is designed to provide reimbursement to repair, replace, or recover the value of the structure of the home and attached structures if they are damaged due to certain causes. 

Dwelling insurance reimburses for the following perils:

Check your policy for the full list of covered perils. You'll also want to determine if you have a named peril vs. an open peril policy. If your policy only covers named perils, it likely limits your protection to the disasters listed above. 

However, an "open perils" policy provides coverage for any event unless the peril is explicitly listed as an exclusion. Your independent insurance agent can help you evaluate exactly which type of protection your dwelling policy offers.

What's Not Covered by Dwelling Insurance?

Dwelling insurance can protect the structure of a home from many disasters, but not just anything. Be sure to become familiar with your policy's exclusions, as well.

Dwelling insurance often won't cover:

• Flood damage
• Sewer backup damage (unless you add an endorsement)
• Failure to maintain the property
• Earthquake damage

An independent insurance agent can help you determine what exactly is excluded by your specific dwelling fire insurance policy.

The Different Types of Dwelling Coverage Explained

There are three different types of dwelling coverage to consider, including DP1 insurance, DP2 insurance, and DP3 insurance. The "DP" in each of these coverages refers to "dwelling policy." Here's a further breakdown to help you choose between them.

DP1 vs. DP3 dwelling coverage

DP-1 coverage can reimburse you for damage or destruction caused by nine specific perils (i.e., aircraft, vehicles, riots, hail, smoke, explosions, windstorms, volcanic eruptions, and fire/lightning). It also factors your home's depreciated value due to its age into your coverage. 

DP-3 coverage offers open perils coverage, meaning it will cover all events except for those specifically listed as exclusions in your policy. DP-3 coverage also provides full replacement cost coverage for your home and doesn't factor in depreciation. These policies provide much broader and more complete coverage than DP-1s.

DP2 vs. DP3 dwelling coverage

DP-2 coverage is essentially a step in between DP-1 and DP-3 coverage. DP-2 policies provide more coverage than DP-1s, but less than DP-3s. A DP-2 policy is known as "Broad Form" and covers the same perils as a DP-1 policy but provides replacement cost coverage, while DP-1 policies provide actual cash value coverage.

A DP-3 policy provides more coverage than a DP-2, since its protection extends to all perils except for those specifically excluded.

How Much Does Dwelling Insurance Cost?

The cost of dwelling insurance depends on the insurance company you go through and how much coverage you need. The cost of your premiums also depends on the condition of your home. In general, it's cheaper than home insurance because it typically doesn’t include liability coverage.  

You’ll want enough insurance to rebuild your home and any attached structures, should they get completely destroyed. Getting your house appraised first is a good way to determine how much dwelling coverage to get.

Can I Get Dwelling Insurance for My Condo or Apartment?

Dwelling insurance policies are generally not used for condos or apartments, but they can cover townhomes. A better policy for an apartment or condo would be an HO-6 insurance policy. 

The amount of dwelling coverage will be dependent on the insurance policy of your property's complex. Every condominium and apartment complex has a master insurance plan that will provide you with information about how much of the property you actually own. 

Based on that, you’ll want to make sure you’re covered for what you’re responsible for. An independent insurance agent can also advise you on the proper amount of coverage to get.

Why Do I Need Dwelling Insurance?

You may be wondering, "Is dwelling coverage required?" It's possible that coverage is actually required by your lender if you have a mortgage on your property. 

Regardless, if you own a second home, dwelling insurance makes the most sense. You're responsible for physical damage to your property, even if you don't live there full-time. Dwelling policies can also include personal property coverage, which can be good to have if you need to protect appliances and other items.

For those who own a single home, dwelling insurance can be a viable alternative to homeowners insurance. Not all properties are approved for homeowners insurance. Sometimes, the property just isn’t valuable enough, or the owner has bad credit or an extensive claims history, which could lead to them getting denied coverage. In this situation, dwelling insurance is easier to obtain than homeowners insurance. 

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How to Find the Best Dwelling Insurance

Homeownership is complicated enough, and adding a second home to the mix can make it even more complex. With all the insurance options, it's best to turn to trusted experts: independent insurance agents. 

Be prepared to discuss all of your properties, your use for each, their location, and the structures at risk when you meet with an independent insurance agent. This will help them find the appropriate type and amount of insurance for you.

Compare Dwelling Insurance Quotes with an Independent Insurance Agent

Independent insurance agents are experts in finding you the right kind of dwelling insurance and any other type of coverage you need. They can shop and compare policies from tons of different insurance companies for you, then present you with only the best quotes together in one place. Also, they're available down the road to help you file claims if you ever need to.