What Is The Difference Between Homeowners and Dwelling Insurance?

Homeowners vs. Dwelling Insurance

Homeowners insurance is a more comprehensive type of coverage that someone would use for their primary residence that covers the structure of your home, your personal belongings, liability and living expenses in case your home is damaged or destroyed and you can no longer live there.

What does home insurance cover? - more details on what a typical home insurance policy covers.

Homeowners insurance is typically divided into Coverage A, B, C and D that correspond to the four areas of coverage noted above together under one package. Coverage A is the structure of the home, B is for outside structures, C is for personal belongings, etc.

Dwelling insurance is homeowners insurance stripped down to "coverage A" only. It only covers the phyiscal structure of the home itself. All other coverages are not included such as personal belongings, etc. Dwelling insurance is typically used by landlords covering their properties while they are being rented. It would then be the responsibility of the tenant to secure renters insurance to cover their belongings and any expenses related to temporarily losing their rented home.

Coverage limits for both Dwelling and Homeowner's insurance

Both policies cover the owner for damage or total loss to the home. Types of damage includes those damages due to fire, hurricane (wind damage; not water damage), hail, lightning, or other disaster listed on the policy. A typical policy will NOT cover you for damage caused by an earthquake or flood. These coverges would have to be purchased separately. You can purchase separate earthquake insurance (in some areas this could be very expensive or can't be covered at all) and/ or flood insurance (through the National Flood Insurance Program). You can get information on the NFIP program and coverage through the NFIP website by first filling out their flood risk profile.

Both types of policies use the "construction cost" method for determining coverage amounts for your home. This is the cost required to replace the home exactly as it was built using today's materials and labor costs. Be careful with this because insurance companies have a tendency to overstate this cost. Be sure to get their data on costs and whether or not it is necessary to cover an older home to todays building standards and costs. Older homes built with stone or full brick homes would be much more expensive to duplicate today.

Investment property insurance

Dwelling insurance is the type of insurance an investment property owner would want to secure. As an investment property owner, you are only interested in the structure of the home itself and not it's contents. Be sure to inform your tenants in writing that they will need to get renters insurance. In fact, it may not be a bad idea to make it mandatory for your tenants to get coverage as this would protect both you and them in case of a misunderstanding if something were to happen to the property.

Want to find a lower homeowner or dwelling insurance rate?

If you would like to see if you can save some money compared to your current homeowners insurance or if you are buying your first home, then we suggest that you compare policies and rates from as many insurance companies as you can prior to buying a policy. We recommend Insureme who allows you to compare several home and dwelling insurance policies from major highly rated insurers. They are unique in that they include quotes from dozens of local insurance agents in your area as well as online only rates. In many cases, independent agents may be able to give you a better deal for the privilege of you becoming one of thier customers.

This should not be considered financial advice which can only be given by a qualifed financial professional. We suggest you consult with a qualified financial planner and/or insurance professional who is most qualified to consult with you regarding policy decisions. Many factors are involved in your policy premium some of which may not be mentioned in this article. We are an affiliate of the Bankrate Insurance Network.

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