What your house would sell for and what it would cost to rebuild are two different numbers. Market value includes the land underneath the house, the neighborhood and local demand. Dwelling coverage is meant to pay to repair or rebuild the structure itself. A fire or storm does not destroy the land, so the land generally does not need to be insured.

If your dwelling limit was set using a purchase price or a market estimate, it may not match your home's actual rebuilding cost. In some areas that means paying for more coverage than you could ever use. In others, where construction is expensive, it could mean you are underinsured, which is a different but equally important problem.

Ask your insurer or agent how your dwelling limit was calculated and when it was last reviewed. Many companies use a replacement cost estimate based on square footage, materials and local building costs. Make sure the details they used are accurate. The goal is coverage that fits what it would really take to rebuild, not a number borrowed from a real estate listing.