What Dwelling Coverage Covers
Dwelling coverage (Coverage A) pays to repair or rebuild the physical structure of your home after a covered loss — foundation, walls, roof, framing, built-in appliances, permanently attached structures, interior fixtures, and all systems (electrical, plumbing, HVAC).
Replacement Cost vs Market Value
How to Calculate Your Dwelling Coverage Amount
| Method | How It Works | Accuracy |
|---|---|---|
| Insurer's online calculator | Estimates rebuild cost from sq footage, age, features | Good starting point |
| Independent appraisal | Licensed appraiser calculates replacement cost specifically | Most accurate |
| Local contractor estimate | Get rebuild cost per square foot from local builders | Very accurate |
| Inflation guard endorsement | Auto-increases coverage limit annually | Best for keeping current |
As a rough benchmark, US average construction costs in 2026 run $150–$250/sq ft for standard homes, $250–$400/sq ft for higher-end construction, and $400+ in high-cost areas like NYC, SF, and Hawaii.
Frequently Asked Questions
At minimum, review your coverage every 2–3 years or after any significant renovation. With construction costs rising 8–12% annually since 2020, policies set 3 years ago may be 25–40% short of current rebuild costs.
An inflation guard automatically increases your dwelling coverage limit each year — typically 4–8% — to keep pace with construction cost inflation. It's worth adding if you don't review your policy annually.
If your home suffers a total loss and your dwelling limit is below actual rebuild cost, you pay the difference out of pocket. With a $400,000 rebuild cost and a $300,000 limit, you owe $100,000 out of pocket.