Best home insurance rates

The Complete Guide to Home Insurance Estimates

If you're buying a home, mortgage companies will require you to purchase home insurance (also known as property or hazard insurance).

However, getting home insurance is a good idea for other reasons as well.

Namely, you'll be protected in case anything bad happens to your home.

The value of damaged belongings, the cost of replacing the property, and other costs are all covered by this policy.

Today, we’re here to teach you how to make home insurance estimates. That way, you'll be able to plan your moving budget much better, and you'll be financially protected if anything unfortunate happens to your home

The basics of making home insurance estimates

Basically, there's a series of calculations.

Think about:

  • What would be the cost if you were to build a home now? Learn how to calculate the cost of building, and do that first.
  • What natural risks pose a threat to your home? For example, the cost of home insurance policies is higher in Florida due to the danger that hurricanes pose.
  • Not counting the vehicles, try to calculate the value of all of your personal belongings.
  • Finally, calculate the value of your at-risk assets. These include vehicles, future wages, business assets, and so on.

If you don't know how to do any of this, don't worry. We're here to help you with that. It is essential to do this properly, as it will allow you to learn what the limits of various coverage's that will be a part of your home insurance policy are.

These coverage's include the dwelling insurance (coverage for the house itself), the personal property insurance (coverage for all of your personal items), and the liability insurance (coverage in case someone gets hurt on your property and then files a lawsuit).

Getting all of this right will allow you to plan your budget accordingly, and that is very important when you're moving. After all, you don't want to have to spend more money than you have.

Planning your budget extends to other operations as well. For example, it's a good idea to find affordable service providers before you set your moving date. That way, you'll get an estimate, and you'll know that you won't have to spend more money than you should.

The cost of building a new home

Let's begin by calculating the cost of building a new home. This cost is not the same as the cost of buying a home.

That's because the land on which the property is located has a significant effect on its price. And when you're building a new home - not so much.

Of course, one of the best tips in terms of home insurance for first-time buyers is that the location definitely has an effect on coverage. Depending on the climate, the coverage may be higher or lower.

The likelihood of hurricanes and other natural disasters influences coverage.

Calculating the cost of building a new home can be tricky.

Home insurance calculator

Luckily, you don't have to do this on your own (although it is possible). You can either hire the services of a local independent professional or use our home insurance calculator to help you. Our calculator will make it easy for you to determine the value of important factors, such as the house's square footage, framework, and rooftops.

On the other hand, you can also get this information on your own.

You should already know your house's square footage. The first step is to determine what the cost per square foot is for building a new home in your area.

Similarly, you'll also need to determine the value of other factors that we've mentioned. Apart from the framework and rooftops, you'll also need to know the cost of your plumbing, flooring, cabinets, and the outside features such as the stonework and siding.

If you don't know what the cost of these features is, you'll probably have to contact the local suppliers and ask them for the information.

Flood and water insurance coverage

Common disasters influence your insurance policy

Home insurance policies usually come with an open peril list.

This is a list of common disasters your insurance policy covers.

Unfortunately, some hazards are usually excluded.

So, after thinking of all the hazards that potentially pose a threat to your home, check if they're included in the insurance policy.

If they're not, these hazards will need to have their own policy. Local flooding, for example, is frequently excluded, but it won't be a problem after getting a separate flood policy.

The value of your personal belongings

When calculating the value of your personal belongings, it's useful to know that the insurance companies will usually set the limit for your personal belongings’ insurance.

This limit is typically between 50 and 75 percent of your dwelling limit. So, when making home insurance estimates, check if the value of your belongings is greater than this limit.

Expensive belongings, such as jewelry and antiques, have their own limits.

Jewelry Insurance Coverage

Sometimes, you may only get 2,000 dollars for all of your jewelry, while individual pieces will get you 1,000 dollars each when damaged.

If you're not satisfied with these figures, you can get a homeowners insurance endorsement. Doing so should provide you with additional coverage.

If you own some expensive jewelry, you may want to get a homeowner’s insurance endorsement to add for expensive jewelry.

Whether you're satisfied with these limits or not, you should still definitely keep a list of all your belongings and their values.

Submit this list, along with the photographs, to your insurance company. That way, it will be easier for you when (if) you need to make insurance claims later on.

The value of your at-risk assets

Finally, you'll also need to calculate the value of your at-risk assets. If you're sued after someone gets injured on your property, you'll be at risk of losing these assets.

Therefore, your personal liability coverage is determined by the value of these assets.

As we said, these include vehicles, future wages, money that's in your bank account, and so on - basically, all the assets that are not exempt from liability lawsuits in your respective state.

Some assets (retirement funds, for example) are exempt in some states only.

So, conduct research based on your state. The goal is to find which at-risk assets will be exempt and which should be included in your home insurance estimate.

We recommend a minimum of $300,000 liability insurance and a personal umbrella policy which covers both the property and vehicles.

Your vehicles are considered to be at-risk assets, and their value will affect you.

Personal liability coverage.

Umbrella Liability Insurance

Usually, insurance companies will offer at least 100,000 dollars for personal liability coverage but will go up to 1 million dollars.

The difference is generally relatively affordable. If you can, we believe that you should take it.

Home insurance estimates, in terms of at-risk assets, may be higher than your liability coverage. In that case, it could be a good idea to get an umbrella policy.

This policy will provide additional coverage if your liability insurance doesn't cover all the costs.

If someone, for example, sues you for 500,000 dollars, but your insurance policy is limited at 250,000 dollars, the umbrella policy will cover the rest, provided, of course, that your umbrella policy amounts to 250,000 or more dollars.

For a fast way to calculate your estimated home insurance premium, use our free Home Insurance Calculator.  No personal information required and only takes 10 seconds to check.  Or, if you'd like an exact quote for your home insurance click on the home insurance quotes tab below.

John Espenschied

John Espenschied owns and manages one of the top insurance brokerages for auto, home, and life insurance in the US. John is a much sought-after resource for journalists seeking his expert insight and knowledge of helping consumers find affordable coverage and advice.

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