What is Dwelling Insurance? How Does It Work?

Posted on: Apr 5, 2024 | 3 mins | Written by: HDFC ERGO Team

What is Dwelling Insurance? How Does It Work?

Many home insurance policyholders are dubious about whether to opt for or buy dwelling insurance. To bring clarity on the inclusions and limitations of dwelling policy, it is necessary to understand what exactly is dwelling insurance and what are its benefits, and what restrictions are there.

In simple words, dwelling is the house you live in and associated physical structures like the porch, deck, or garage, if attached to the main building. The built-in cabinets, water heaters, furnaces, and permanent air conditioners, are also considered covered under dwelling insurance.

To summarise the various types of dwelling insurance coverage components are:

• Physical structure repairs

• Other structural elements rebuilt expenses

• Stand-alone appliances damage refunds

• Liability coverage

• Medical payments

Dwelling Insurance Coverage:

The coverage of home insurance is dynamic and varies according to the geographical region. So a dwelling insurance policy will be different for two different states. It is always advised for home insurance policy subscribers to check and note what their policy covers and the determined limitations. Additionally, talking to an insurance company agent will give you a clear view of the coverage or whether you have purchased a policy that has open perils coverage.

Here are enlisted sets of events and their repercussions that are included in the dwelling insurance coverage.

• Natural calamities: Windstorms, hail, falling objects, ice, sleet, snow, or lightning strikes

• Explosion

• Vandalism and Theft

• Damage from an aircraft or motor vehicle

Dwelling Insurance Limitations:

Some perils are not covered as part of your home policy, which you must know. On discussing the policy coverage criterion with the insurance company representative, you will gain clarity on which peril damages are essential to get covered under your home insurance. Then you can purchase the additional coverage and seek the necessary benefits.

The Damages are not Covered by a Standard Home Policy

• Earthquakes:

Earthquakes extensively hamper the physical structure of your home. If you are located in areas where earth movement or oil drilling is common, then adding this coverage will be helpful to you. Because earthquakes can cause serious damage to the building's foundation and walls.

• Flooding:

A standard home policy doesn’t refund damages caused by flooding. Flooding is not a common threat but considering the changing weather conditions, flooding is more likely a natural calamity. However, revision in policy norms is not done yet.

• Wear and Tear:

Any kind of damages caused to your home due to negligence and no regular maintenance, the policy company will not be responsible for the repercussions or damages.

• Service Line damage:

To safeguard the losses relating to the different service lines, such as gas pipelines, water connections, electrical wire networks, and sewer lines, there is an introduction to a new coverage scheme called the service line damage coverage. You may consult the insurance agency professional and get to know whether service line damage coverage options are available for you.

• Sewer Backup:

The most common endorsement of the home policy is the sump pump or sewer-caused backup losses. This kind of damage occurs due to overflows and spilling of water in basements and other areas. A water backup coverage will help you claim for all the repairs.

Which Dwelling Coverage will I Need?

This at first seems to be a complex question. So, let us follow a step-wise procedure to simplify the solution on how much home issuance coverage should refund you for the repairs in various areas. This list of questions helps you determine what’s needed as part of your home policy.

• How old is your home?

The age of your home directly impacts the repair cost. Older homes are built using old and traditional techniques and so the damages are expensive.

• What set of features and appliances does your home have?

Builder-grade homes are less likely to give repairs, unlike customised well-furnished homes.

• What is the size of your home, inclusive of the associated physical structures?

Basements, porches, decks, and garages are some examples of associated physical structures to your main home structure. So, more dwelling coverage is needed if you have bigger homes. Small homes require a typical cost to repair and rebuild the structures.

In addition to these questions, knowing the market and replacement values is a must. Also, include the costs incurred to build your home, which encompasses have many factors, like the geographical location, age of the building etc. Your home’s replacement cost, if determined, will help you define the rough estimated costs to rebuild your home.

Dwelling Insurance Type:

Multiple policy options offered that include dwelling coverage are the home insurance policy, rental insurance policy, or condo insurance policy. Knowing the laws and regulations is important before you opt for any additional endorsements in your existing policy. Here, your policy representative plays a key role in keeping you aligned with what your coverage offers.

Conclusion:

If you have any home insurance coverage and dwelling insurance, you now know what are the inclusions and exclusions. Also, if you wish to opt for any additional services, your insurance policy representative can be your saviour. Now, you will have the right questions and a checklist on which dwelling coverage you must purchase, depending on your home. Note your geographical area and then take the plan accordingly.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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