Understanding Dwelling Coverage in Illinois

Dwelling coverage is the foundation of your home insurance policy. It protects the physical structure of your home against unexpected disasters.

What Does Dwelling Coverage Protect?

Also known as Coverage A on your home insurance policy, dwelling coverage helps pay to repair or rebuild the physical structure of your home if it is damaged by a covered peril.

This typically includes:

• The foundation, walls, and roof
• Attached structures like a garage or a deck
• Built-in appliances (like a furnace or water heater)
• Plumbing and electrical wiring

How Much Dwelling Coverage Do You Need?

One of the most common mistakes homeowners make is confusing their home's market value with its reconstruction cost.

Your dwelling coverage limit should equal the estimated cost to rebuild your home entirely from the ground up using similar materials and local labor rates. It should not be based on what you paid for the home or what it would sell for today, as market value includes the value of the land (which doesn't burn down or blow away).

Replacement Cost vs. Extended Replacement Cost

When rebuilding after a major disaster (like a severe tornado or widespread fire), the cost of construction materials and labor often spikes due to high demand.

• Replacement Cost: Pays up to your policy limit to rebuild your home.
• Extended Replacement Cost: Provides an additional cushion (often 20% to 50% above your policy limit) to absorb unexpected surges in construction costs. We highly recommend this for Illinois homeowners.

Make Sure Your Home is Fully Protected

If you've recently renovated your kitchen, finished your basement, or added an extension, your rebuilding cost has likely increased. It's crucial to update your dwelling coverage to reflect these changes.