How much dwelling coverage do I need on my homeowners policy?

Dwelling coverage should equal the cost to rebuild your home, not its market price or what you paid. Rebuild cost excludes the land and reflects current local labor and materials, which have risen sharply, so many homes are underinsured. Ask your insurer for a replacement-cost estimate and consider an extended or guaranteed replacement-cost endorsement that pays above the limit if rebuilding costs spike.

Also check your policy for an inflation-guard feature that adjusts coverage yearly. After renovations, update the limit. Being underinsured matters most after a total loss, when a coinsurance penalty can reduce even partial-loss payouts if you carried less than roughly 80% of full replacement cost. Review the rebuild figure at each renewal.