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We are asked frequently about the dwelling coverage limit on home insurance policies--

“Why is the dwelling coverage not the same as the purchase price?”

“I only paid x amount for the home why do I need it insured for more?”

“My loan is X amount don’t I need insurance for that amount?”

Basically when you are purchasing home insurance the dwelling coverage amount is unrelated to the market value, tax value, and purchase price.

The home insurance is based on the estimated replacement/rebuild cost of the home. Each company uses building estimate tools/calculator where the data about the home is input such as the square footage, features, number of bathrooms, attached garages, porches the quality of construction(basic, average, custom etc.). The tool is only an estimate so if you do feel strongly that the coverage amount on your policy is either to low or to high we would recommend reviewing that with your agent/company to make sure you are comfortable with the coverage amount on your policy.

If there is a loan on the home you are still only required to insure based on the estimated building cost even if that is lower than the loan amount.

We hope this information helps to provide a basic understanding/answers to some of those frequent questions we receive.

 

 

Scott E Weeks, CPCU President

phone: 386.734.7283 | email: sweeks@cflinsurance.com|

web: www.cflinsurance.com

206 N. Woodland Blvd  Deland Fl  32720

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