# How much dwelling coverage you need

> Rebuild cost versus market value, what Coverages A to F mean, typical limits set by a state regulator, and how the coverage amount moves your premium.

- Address: https://typicalhomeinsurancecost.com/how-much-coverage/
- Regulator, statute or survey: [Minnesota Department of Commerce, property coverage basics](https://mn.gov/commerce/insurance/home/old/insurance-basics/property-coverage.jsp)
- Source read on: 2026-11-06
- Tables as JSON: https://typicalhomeinsurancecost.com/data/how-much-coverage.json

The single number that moves your premium most, after your state, is the dwelling limit: Coverage A. It should equal what it would cost to rebuild the house from the foundation up at today's labor and material prices. It isn't what you paid, what the house would sell for, or what the county assessor says.

## Rebuild cost is not market value

Market value includes the land, the school district and the view; none of those burn down. Rebuild cost includes things a sale price ignores: demolition and debris removal, building to the current code, and the premium builders charge after a disaster when everyone needs them at once.

| House | Market value | Likely rebuild cost | Why they differ |
|---|---|---|---|
| 1950s bungalow on a valuable city lot | $780,000 | around $320,000 | Most of the price is land |
| New suburban two-story | $450,000 | around $400,000 | Land is a smaller share |
| Rural farmhouse with plaster walls | $220,000 | around $380,000 | Old materials and craftsmanship cost more to replace than the market pays |

The rebuild figures in that table are illustrations, not estimates for a real house. For scale, the home builders' trade group NAHB found that construction cost made up 64.4% of the average new-home price in its 2024 survey ([NAHB Eye on Housing, January 2025](https://eyeonhousing.org/2025/01/cost-of-constructing-a-home-in-2024/)); a realtors' association summary of the same survey, linked from our [sources](https://typicalhomeinsurancecost.com/sources/), put that cost at $428,215 on an average sale price of $665,298. Rebuilding an existing house after a loss usually costs more per square foot than building new in a subdivision, because crews work on one site and have to clear it first.

## The six parts of a homeowners policy

A state regulator's summary of the standard limits ([Minnesota Department of Commerce](https://mn.gov/commerce/insurance/home/old/insurance-basics/property-coverage.jsp), read October 30, 2026):

| Coverage | Pays for | Usual limit |
|---|---|---|
| A, dwelling | The house and attached structures | The rebuild cost you choose; insurers usually require at least 80% of it |
| B, other structures | Detached garage, shed, fence | 10% of Coverage A, can be raised |
| C, personal property | Your belongings | Usually 50% of A; many owners raise it to 70% or 75% |
| D, loss of use | Extra living costs while you can't live in the house | Set by the policy; pays during repairs or relocation |
| E, personal liability | Injuries or damage you're legally responsible for | $100,000 is standard |
| F, medical payments | Small medical bills for guests hurt at your home, regardless of fault | Set by the policy |

Because B, C and D are percentages of A in most policies, raising the dwelling limit raises all of them, and the premium.

## The 80% rule and why underinsuring backfires

Many policies pay full replacement cost on a partial loss only if Coverage A is at least 80% of the rebuild cost at the time of the loss. Below that, the insurer can scale down what it pays. Say the rebuild cost is $400,000 and the policy says $280,000 (70%). A $60,000 kitchen fire could be settled at 70 ÷ 80 = 87.5% of the claim, or $52,500, leaving $7,500 on you, before the deductible. Check the wording of your own policy: the clause and the percentage vary.

## How coverage moves the premium

Premiums rise more slowly than coverage. The regulator's own 2023 table shows it on real policies: three times the cover (the $200,000 band against the $600,000 band) cost about 1.75 times as much, as the band table on [how much homeowners insurance is](https://typicalhomeinsurancecost.com/how-much-is-homeowners-insurance/) shows ([NAIC, Table 4](https://content.naic.org/sites/default/files/publication-hmr-zu-homeowners-report.pdf)). The estimator uses those band averages directly.

| Coverage A | NAIC band average ÷ $1,737 | Texas example (the estimator's step on Texas's 2023 average) |
|---|---|---|
| $200,000 | 0.738 | $2,640 |
| $300,000 | 0.849 | $3,040 |
| $400,000 | 0.967 | $3,460 |
| $600,000 | 1.295 | $4,640 |

So shaving coverage to save money buys little: going from $400,000 to $300,000 cuts this Texas premium by about an eighth while removing a quarter of the protection.

## Finding your number

1. Look at your declarations page: Coverage A is listed, often with an "inflation guard" that raises it each year.
2. Ask your insurer which replacement cost tool produced it and what square footage, roof and finishes it assumed. Errors in square footage are common.
3. For an unusual or older house, a local builder or appraiser can price a rebuild per square foot for your area.
4. Enter the result in the [estimator](https://typicalhomeinsurancecost.com/) to see the premium at that figure, and in the deductible tool if your wind deductible is a percentage of A.

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From Typical Home Insurance Cost. Corrections: contact@typicalhomeinsurancecost.com