When it comes to protecting your property, choosing the right type of insurance is crucial. While home and dwelling insurance may sound similar, they serve very different purposes. Understanding how they differ can help you avoid costly coverage gaps—and ensure peace of mind whether you're living in your home or simply owning it.

What Is Home Insurance?

Home insurance or homeowners insurance is best suited for those who reside in their house on a permanent basis. Home insurance provides complete protection, usually bundling different types of insurance into a single package. It becomes a complete solution for dwellings owned and occupied by residents.

Home insurance usually includes:

• Dwelling coverage for the main building of your home
• Personal property coverage for contents in the home
• Liability cover for accidents or injuries that happen at your property
• Additional living expenses if your home becomes uninhabitable due to an insured loss

The all-in-one policy helps homeowners manage various potential perils, ranging from theft and fire to lawsuits and temporary relocation.

What Is Dwelling Insurance?

A homeowners insurance policy is more restricted in scope and will be used mostly for a primary residence other than the one in which one lives year-round. They could be weekend places, investment properties, or homes that come to sit idly for weeks or months.

Home insurance dwelling coverage generally includes:

• It covers the building itself (walls, roof, floors, and built-in fixtures).
• Usually protects against specific risks like fire, lightning, wind, hail, and vandalism.
• It does not automatically include personal property, liability, or additional living expenses.

Dwelling policies rarely include personal property coverage, liability coverage, or loss of use unless added by endorsement.

The Three Types of Dwelling Policies: DP-1, DP-2, and DP-3

The amount of dwelling policy you purchase affects the coverage. These policies are also commonly known as DP-1, DP-2, and DP-3.

• DP-1 (Basic Form): Offers minimal coverage for a limited list of perils and may only pay the actual cash value of losses.
• DP-2 (Broad Form): It covers a more comprehensive list of perils and generally includes replacement cost protection.
• DP-3 (Special Form): This is the most comprehensive dwelling policy, covering all perils except those specifically excluded.

While such policies are helpful in ensuring a structure, they are not meant to provide the wide range of protection that house insurance provides.

Key Differences Between Home and Dwelling Insurance

The following are some of the differences:

• Occupancy: Dwelling insurance covers rental, seasonal, or vacant homes, while home insurance covers owner-occupied homes.
• Coverage Extent: Home insurance offers coverage for dwelling, contents, liability, and loss of use. Dwelling insurance insures mainly the building.
• Cost: Dwelling insurance is usually cheaper, but that is because it has less coverage.
• Policy Requirements: There are policy requirements that insurers require you to purchase based on how you will be using the property. Be sure not to do this wrongly, as it will disqualify you from your claim.

A home insurance policy is the right choice if you live in your home year-round and need full coverage. On the other hand, if you own a property you rent out, use seasonally, or leave vacant, a dwelling insurance policy may be a better fit.

It is also possible to have various kinds of insurance for various properties. For instance, you can have a homeowners policy on your main residence and a dwelling policy on your rental house or cabin.

Final Thoughts

Whether you should get home or dwelling insurance is determined by how you occupy your property. Both are good protection, but they're for different reasons. Consider your coverage needs and speak with an insurance agent to properly cover you—particularly if you own several properties.

Also, ensure your insurance policy accurately reflects how each property is used. Misclassifying a property (e.g., using homeowners insurance on a rental) could lead to denied claims when you most need coverage.

FAQs

What does dwelling insurance cover?

Dwelling coverage covers the home's physical structure, such as walls, roof, and permanent installations, against scheduled perils like fire, wind, and vandalism. It does not automatically include contents or liability.

Can a home insurance policy be used for a rental property?

No. Home insurance is designed for main homes. Applying it to a rental or vacation home might lead to rejected claims. For those homes, a dwelling insurance policy must be used.

Is dwelling insurance less expensive than home insurance?

Yes, generally. Dwelling insurance tends to be less expensive because it provides limited coverage centered on the building, whereas home insurance provides more extensive protection.

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