Understanding the difference between a dwelling and a homeowners insurance policy

Buying new home insurance can be overwhelming – there are so many options and policies available that it’s easy to get lost and opt for the cheapest options. Unfortunately, buying coverage for your home isn’t as simple as just opting for the cheapest policy. Buying cheap and in-sufficient coverage can cause major financial stress should the unexpected occur, because any gaps in coverage will be covered out of your own pocket.

Before buying new home insurance, it’s important to understand what to ask for when shopping for insurance and to talk with an independent insurance agent who represents multiple companies and understands the unique New Orleans insurance market.

Differences between a homeowners policy and a dwelling policy

A homeowners insurance policy can vary in coverage limits and options from company to company but one thing is common across all companies, and that is a homeowners policy is more comprehensive than a dwelling policy.

What is a Dwelling Policy?

Dwelling policies were initially designed for vacant or tenant occupied rental properties, not properties occupied by the homeowner.

When you buy a dwelling policy instead of a homeowners policy you will lose a few types of coverage including replacement coverage on the contents of your home, theft coverage and water backup coverage. Because dwelling policies lack these coverages, they are cheaper and therefore can be a more appealing

Ask before you buy

Always ask for details before you buy any insurance policy – whether it’s for your new home or any other item you are looking to insure. Dwelling policies certainly have their place, but make sure you know what you are getting, or not getting in this case.  In Louisiana, all new homeowners should ask before buying to ensure you are getting the correct coverage.

Talk with your local insurance agent to find the right home insurance for you and if you need more clarification on what you are purchasing it never hurts to ask for more details!