How is Your Coverage A- Dwelling Calculated?

June 20, 2023

A calculator and home with text reading "The Replacement Cost Estimator."

Many people are concerned about how much coverage they have on their home when it comes to their homeowners insurance Tampa policy. They always wonder why their purchase price was so much higher than their dwelling amount. I am here to explain and clarify any questions you may have.

First, let’s define the term dwelling coverage. “Dwelling coverage, sometimes called “dwelling insurance,” is part of your homeowners insurance Tampa policy that may help pay for the rebuilding or the repair of the physical structure of your home if it’s damaged by a covered hazard.” We get the number for your dwelling amount by using a “Replacement Cost Estimator” or RCE. The RCE is like a calculator where we put in every spec in your home. We put in the construction type, square footage, type of floors, countertops, etc. and it spits out a range of numbers. We then usually take the middle number of the change and make that your dwelling coverage.

The question we get asked the most is, “Why is my purchase price $650,000, and your only covering the home for $550,000”. That is because of land value. Homeowners insurance carriers in Florida only cover the dwelling and not the land it sits on. So when we are coming up with your coverage A dwelling amount, we will take the value of the house and subtract the land value.

This is pretty much what the RCE does for us. If you ever have a question on our RCE amount, the appraisal you get on your home also has a section of what the bank thinks the house is worth, minus land value and we can use that number as well.