How to get home insurance estimates
If you're not sure how to calculate homeowners insurance, it's not as hard as you think. There are many variables to consider when working up a homeowner insurance estimate, and we’ll break it down into a few easy steps.
Step 1: Calculate your home's replacement cost (dwelling coverage)
Step 2: Calculate the value of your personal belongings
Step 3: Decide how much homeowners liability you need (and medical payments)
Step 4: Choose additional coverage options
Step 5: Choose a deductible
Step 1: Calculate your home's replacement cost (dwelling coverage)
Your dwelling coverage should equal the cost to repair damage to your home or rebuild it completely at equal quality — at current prices. This is called the replacement cost. Figuring out how to calculate home replacement cost can be a challenging task, but can be done by making a thorough inventory of building materials used for your home, using an online home insurance estimator or hiring an appraiser to do it for you.
When buying homeowners insurance, you should get enough dwelling coverage to match the full replacement cost of your home. An estimate will work for quote comparison purposes, but you need an accurate number to make sure you’re properly insured.
Step 2: Calculate the value of your personal belongings
Coverage for your personal property is included as a percentage of the dwelling coverage. It can range from 50% to 70%, but how much you need is personal.
Complete a home inventory to get an idea of how much personal property coverage you need. If the included amount isn't enough, you can increase it. When you estimate home insurance coverages, it's important to be as accurate as possible to avoid being underinsured.
Step 3: Decide how much homeowners liability you need (and medical payments)
Most home insurance policies come with $100,000 in personal liability insurance, but most experts recommend upping your limits to at least $300,000.
Liability insurance pays out when you or a family member are legally responsible for others’ injuries or property damage. Personal liability also covers legal fees if you are sued, as well as any resulting judgments from a lawsuit, up to your policy limits.
Medical payments coverage pays for injuries to guests in your home, regardless of who is at fault. Medical payments differs from liability insurance in significant ways, primarily in that it is for minor incidents and comes in very low limits of $1,000 or $5,000. The highest amount available to you is recommended.
Step 4: Choose additional coverage options
With the basics in place, you can look at the options available from the insurance company. Common add-ons and home insurance endorsements you might want to consider are:
- Upgrading to a higher or extended/guaranteed replacement cost
- Upgrading personal property coverage to replacement cost
- Water and sewer backup
- Riders on high-value items such as jewelry and art
Some companies offer upgrade packages that include the most popular options for one price.
Step 5: Choose a deductible
The deductible is your share of the repair cost when you file a claim. Your home insurance premium will be lower if you choose a high deductible. If you have a $500 deductible, you're going to pay more on your premiums than if you have a $2,000 deductible.
Going with a higher deductible will save you money. It will also mean you pay more out of pocket if there’s a claim. That’s why it’s important to know the trade-off you’re making – and be comfortable with it -- when choosing a home insurance deductible.
Comparing home insurance quotes
With all of the above information ready, you can request home insurance quotes and compare them. Make sure you compare three to five quotes to find the best deal.
As you look at the quotes, ensure they all include the same coverage, and look for any add-ons that are included with the policy. Some insurance companies offer extras at no charge, adding value.
While you’re comparing, make sure you also research the company’s reputation. Our best insurance companies ranking is a good place to start.
Helpful home insurance tools and calculators
