Fortunately in the U.S., most regions are, for example, prone to earthquakes but not hurricanes, tornadoes but not floods. But there are exceptions, and it is important for you to be familiar with the environment that you are planning to build your home, raise your family, and spend your life. Even more distant to the American home buyer is the occurrence of war or nuclear hazard, but if you are concerned with such, it is important to know that dwelling coverage does not cover these.



Once you have determined any foreseeable losses or damages that your home could incur and have decided to purchase dwelling coverage, it is time to understand just how much reimbursement you will receive if damage or loss should occur. And once again, it is important to read the fine print. Dwelling coverage is broken down into two very different means of damage or loss compensation: Replacement Value and Cash Value.



Replacement Value means that your homeowners insurance company will reimburse you for the cost of your home. Cash Value means that your homeowners insurance company will reimburse you for the actual market value of your home. Though both forms of compensation should cover the costs of damage or loss in ideal circumstances, sometimes choosing one or the other means the difference between a dream and a nightmare. For example, in areas of the U.S. where home and property values have plummeted due to the recession, Replacement Value compensation will be in the amount of the actual cost of the replacement of all things damaged or lost. Cash Value, however, will only compensate you for the market value of your home, which in the case of many Americans these days would work out to be a nightmare.

As in all types of insurance, dwelling coverage may seem worth your time or money if you feel your new home will be in a location free of the perils that dwelling coverage protects you against. But it is important to know that dwelling coverage comes in varying degrees of complexity: Basic, Broad, and Special. The differences are in the scope of perils that you would like your home to be covered for. Are you looking for only compensation for fire or lightning damage? Then Basic coverage is for you. If you would like compensation for a hotel while your home is being repaired, consider Broad coverage. And if you are concerned about a wide range of perils and also living expenses while away from your home during repairs, then Special coverage is best for you.

It is always easy to decline certain coverage when purchasing a homeowners insurance policy, but make sure you know just exactly what you are sacrificing to save a few dollars. Dwelling coverage may seem excessive at first, but knowing that it can flex to meet your needs could mean saving a fortune in the long run.