Your home’s rebuild cost could be far higher than you think—here’s why getting your Dwelling limit right is critical.

What Is Dwelling Limit?

Your Dwelling Limit, or Coverage A, covers the cost to rebuild your residence and any directly attached structures, such as garages or decks, in case of damage or destruction.

It’s the foundation of your homeowner’s insurance, and often a benchmark for determining your other coverage limits and the primary driver of premiums.

Despite its importance, many homeowners don’t realize that their limit may be too low until it’s too late.

How Dwelling Limit Is Determined

Many people incorrectly assume their home’s dwelling limit should simply mirror its market value.

Your dwelling limit is often lower than the market value of your home but not always.

The cost of rebuilding your home today will be dictated by a wide range of considerations, including (but not limited to):

• Shortages of skilled builders and craftsmen
• Inflated costs for materials like lumber, stone, copper, and steel
• Labor surges and higher transportation costs (especially for homes in urban or remote areas)
• New code requirements that might require updated HVAC and fire systems, or electrical and plumbing upgrades

This is especially true for high-end homes, which often have unique features that are not quick nor easy to replace. These elements raise the cost of reconstruction, as well as likely causing it to take longer to rebuild accurately.

One way to think about a bottoms up approach to calculating your dwelling limit is to break the different floors of your home down by square footage and assign a price per square foot to rebuild that part of the home, summing them up.

For example:

Note: These rebuild price per square foot are approximated and may be too high or too low for your location and build quality

Replacement Cost Types