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A 2% wind deductible on $350k of coverage is $7,000 per storm — and insuring to 80% short pays even a kitchen fire pro-rata.
Most homeowners insure the wrong number. Dwelling coverage should equal what the house costs to REBUILD — labor and lumber — which has nothing to do with market value: the land survives every fire, and in cheap markets rebuild exceeds market price while hot markets insure dirt. Two traps compound it: the 80% coinsurance rule (insure below 80% of replacement and even partial losses pay pro-rata — a $50k kitchen fire pays $42,857), and percentage wind/hail deductibles computed on the dwelling limit, not the claim — 2% on $350,000 is $7,000 out of pocket per storm. This calculator sizes your real need, prices the deductible in dollars, and shows whether your policy would actually rebuild you.
Homeowners use it at renewal: sqft × rebuild cost sets Coverage A (market value is land plus mood), the 80% coinsurance rule turns underinsurance into pro-rata partial payouts, and a 2% wind deductible is $7,000 in real dollars.
Because the policy rebuilds structures, not real estate. Market value includes the land — which can't burn, flood upward, or blow away — plus location premium, school districts, and market mood. Rebuild cost is construction only: square footage × local cost/sqft, adjusted for custom finishes, older-home code upgrades, and post-disaster price surges. In a $250k market, rebuilding your home might cost $350k (insure $350k — market value is irrelevant). In San Francisco, a $1.8M home might rebuild for $500k (insure $500k — the extra $1.3M is land). Insurers estimate this with replacement-cost tools; the errors come from stale square footage, missing renovations, and wrong quality grades. Check the inputs, not just the output — and re-check after any remodel, because your $60k kitchen just raised rebuild cost whether you told the insurer or not.
Most policies require insuring to at least 80% of full replacement cost; fall below and PARTIAL losses pay only in proportion — (coverage ÷ 80% of replacement) × the loss, minus deductible. The example is brutal: $240k of coverage against a $350k rebuild means a $50,000 kitchen fire pays $42,857 — you eat $7,143 plus the deductible on a PARTIAL claim, and a total loss leaves you $110,000 short. The trap springs silently because home prices and construction costs drift apart: people insure to purchase price from years ago while rebuild costs inflated 30–40%. The fix is cheap — raising Coverage A costs roughly $3/year per $1,000 of coverage — and the extended replacement endorsement (125–150% of Coverage A) hedges the surge pricing that follows regional disasters. This is the highest-value 20 minutes in personal insurance.
The two big ones are always separate: flood (rising water from outside — NFIP or private market, 30-day waiting period, and about a third of NFIP claims come from outside high-risk zones so "not in a flood zone" isn't safety) and earthquake (separate policy or endorsement; percentage deductibles of 5–25% apply). The fixable gaps inside the policy: sewer/drain backup (excluded by default, covered by a cheap endorsement — buy it), ordinance-or-law (code-required upgrades when rebuilding an older home — another cheap endorsement), and mold/gradual damage (mostly excluded). Also capped: jewelry, firearms, and cash have tiny sublimits ($1,500–2,500 typical) — schedule valuables separately. Hurricane-prone states add the named-storm deductible (the percentage trap above). Read the exclusions page once; it's shorter than the policy and matters more.