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What dwelling insurance entails

What dwelling insurance entails

When buying home insurance, you may be confused by the different types provided such as dwelling insurance, structures insurance and home building insurance and you may fail to tell the difference. It is important to know what these types of insurance entail.

Below are explanations to help you understand what dwelling insurance is.

This type of insurance policy only covers the structure of the home against the insured named perils. You can purchase it to cover the home that you are living in or a home that you own and rent such as a vacation or rental property. In case you use it to cover the home you are living in, you should note that in case any of the perils covered take place, you would not be compensated for possessions in the home.

Perils covered

When you take the policy, your home structure will be covered on named perils with the standard ones being wind, fire and lightning damage, smoke damage, riot, explosion, hail and sinkholes. Other perils covered include theft on structure and vandalism among others. The coverage is for rebuilding the damaged structure in terms of labor and building materials. The home structure covered consists of the home itself and other structures attached to it such as the garage, deck or porch. If a structure is unattached such as the guest houses, unattached garage and sheds, it is not covered. In case you would like to have the unattached structures covered, you would be required to add them separately to the policy.This type of insurance is less comprehensive than homeowners insurance in that it does not cover personal possessions in the home and other structures in the property.

Who should use this insurance?

The policy in this case only covers the structures where you are living and therefore it can be referred to as home building insurance. It does not cover other structures in the premises or the contents in it. This differentiates it with a full homeowners insurance policy that covers the all the structures in the property and the contents inside the structures. The reason you may opt for a dwelling insurance is if you do not worry about the contents of the home. For instance, if you own rental property or a building that you are leasing out, your only concern is the structures and not the contents inside. You should therefore insure the structures while the renters should insure their contents. This means that you do not need a full homeowners coverage. You can take a version of tenant dwelling insurance where you can add other perils to the policy such as coverage on burst pipes, broken windows or glass, water damage and other damages that may result due to the property being occupied by tenants. You may also opt to insure only your structures in case you cannot access full homeowners coverage due to bad credit, past claims and the poor condition of the property. To protect your property, you may have to use dwelling insurance for owner occupied structures.

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