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The Difference Between Homeowners and Dwelling Insurance

By July 12, 2021September 30th, 2021Home

When you shop for homeowners policy coverages, you might be faced with a host of options. After you weigh your choices, you may decide to buy the least expensive coverage. Unfortunately, merely buying coverage based on price could end up causing you some stressful financial issues if something unexpected happens, and you discover gaps in your coverage that will force you to pay out of pocket.

There are significant differences between a homeowners policy and a dwelling policy. While home insurance policy coverage can vary in limits and options from company to company, one thing is always the same: homeowners policy coverages are more comprehensive than those of a dwelling policy.

Here is a look at the two types of insurance coverage:


What does homeowners insurance cover?

Since a substantial portion of your assets is likely invested in your home, homeowners insurance is essential to protecting the structure, your personal property, and the legal and medical expenses you could incur if you are held liable for an accident.

Homeowners policy coverages include perils such as fire, wind, hail, theft, and sudden water damage (floods and gradual leaks are not covered). While theft is covered, there will probably be limits placed on rare or unusually high-value items that include jewelry, antiques, art, coins, or other possessions worth $5,000 or more. You would cover these items in a separate policy known as a “personal floater.”

Liability coverage is also critical since it covers you against lawsuits for bodily injury or property damage that you or your family members cause to others. (It even pays for damage that your pets create). Liability also pays the cost of your defense in court, and it covers court awards up to the limits of the policy.

Another homeowners policy coverage is called additional living expenses, also called Coverage D. This covers the necessary living expenses (up to the stated limit) when your house cannot be occupied because of a covered loss.


How does dwelling insurance differ from home insurance policy coverage?

One can see that homeowners insurance provides comprehensive coverage for the building, personal belongings, as well as liability protection. Dwelling insurance, sometimes referred to as “investment property insurance” or “second home insurance,” covers only the building.

Homeowners insurance is meant for an insured’s primary home, meaning that the insured lives in the house for most of the year. Insurance companies usually define “most of the year” as at least six months. The primary residence would contain personal belongings, which, along with the structure itself, are covered under the policy.

Dwelling insurance, on the other hand, is appropriate in circumstances other than insuring a primary residence. Rental properties and vacation homes would be two of those circumstances.

An investment property that you rent out only requires coverage for the building and liability. A dwelling policy would be the perfect fit: you don’t need to insure your belongings since they are not here, and the tenants will insure their personal property.

However, it is a bit more complicated for those with vacation homes that they rent out for part of the year. Some companies offer a dwelling policy for insureds who rent the property for more than three months a year. The owners who have belongings on the property, such as appliances and furniture, will need to include liability and personal property coverage. Other companies will allow the property owner to purchase a standard homeowners policy under these circumstances. In this case, the insureds must live in the home for a designated amount of time each year.


What about a house that is vacant or under renovation?

Even though someone is on the property during renovation, you will need dwelling insurance for what the insurance industry calls ‘vacant property.’ For permanent residency status, someone must use the property’s address as a full-time residence. A vacant dwelling often costs more to insure, and it might even be challenging to get insurance. An experienced insurance agent can help you obtain coverage for a vacant dwelling.


Talk to one of White Cloud Insurance’s experienced experts

The insurance advisors at White Cloud Insurance are ready to help you choose the right coverage for your situation. Whether you need standard homeowners coverage, dwelling insurance, or the best policy for that vacant rental property, we can assist you. Use the convenient contact form, call us at 305-556-1488, or send us a message at