What is Dwelling Coverage? Dwelling Coverage[dwel-ing / kuhv-er-ij]noun1.Dwelling Coverage is the portion of a Homeowner’s Insurance Policy that covers the physical structure of the insured home. It is the portion of the Policy that may help rebuild the structure of a home if it is damaged. Share | Related Content Accidents Accidents happen to everyone. We’re here to help. What is a Dwelling Fire Policy? Do you know what a Dwelling Fire Policy is? Long-Term-Care Protection Strategies The chances of needing long-term care, its cost, and strategies for covering that cost.