Home insurance calculator: Estimate your coverage costs

Calculate your home insurance costs and coverage needs 

One of the most important parts of homeownership is securing a homeowners insurance policy to protect your home and belongings against the unexpected. But how much should you expect to pay for home insurance? And how do you figure out how much insurance you need? To get the answer, start by using our homeowners insurance calculator.

How your home insurance rates are calculated

The average cost of homeowners insurance in the U.S. is $1,249 a year, according to the National Association of Insurance Commissioners. [1] But insurance companies consider multiple factors when setting your rates, including:

• Your home’s location: Your insurance premiums (the amount you pay for coverage) are largely determined by how at-risk your home is to being burglarized or damaged by a natural hazard like a hurricane or wildfire.

• Your home’s characteristics: The age, square footage, number of rooms, and building type of your home, as well as the condition of its electrical and plumbing, and the age of its roof can all affect your insurance rates.

• The coverage amounts in your policy: Insurance rates will vary depending on the amount of property you’re insuring. That includes your home’s replacement cost, as well as if you have expensive art and electronics to insure, or how much coverage you want for personal liability.

• Your policy deductible: A deductible is the amount you pay out of pocket every time you file a claim. If you choose a high deductible, you’ll pay lower rates, and vice versa.

• Your credit and claims history: A low credit score or recent homeowners insurance claim can mean higher rates, while a higher credit score means you’ll probably pay less.

How to figure out how much home insurance coverage you need

When you’re shopping around for homeowners insurance and comparing quotes from multiple companies, make sure the coverage estimates in the quotes you’re getting reflect your actual coverage needs.

To ensure you’re getting an accurate cost comparison, you need to know three things: The replacement cost of your home at today’s construction and labor prices, the value of your personal belongings (excluding vehicles), and the value of your combined assets in case you’re held liable for an accident and sued.

1. Estimate the replacement cost of your home

Your replacement cost estimate, meaning an estimate of how much it would cost to rebuild your house from the ground up, will inform how much dwelling coverage you need. 

Remember, your dwelling coverage limit should be equal to your home’s rebuild cost, not its fair market value or sales price.

There are a few different ways to get a replacement cost estimate of your home: by using an online home insurance calculator, by hiring an appraiser that specializes in replacement cost appraisals, or by calculating your home’s rebuild cost yourself.

• Use Policygenius’ home insurance calculator: For a quick and accurate estimate, use our homeowners insurance calculator. You’ll simply answer a few questions about your home, like its square footage, the type of heating system you have, or whether you have a basement. We’ll send you an estimate detailing your coverage amounts as well as rates with multiple insurance companies.

• Estimate your home insurance coverage limits yourself: You can find the average price-per-square-foot in your area by contacting a local builder or contractor. Then multiply the estimated amount by your home’s square footage. That will give you a general idea of how much dwelling coverage you should have in your policy.

• Use coverage limits from a previous policy: If you’ve previously insured your home with a different company, you can transfer the information in that policy to your current insurer, provided all the information in the old policy is up-to-date and correct. (Your dwelling coverage amount should be updated every year to reflect any increases/decreases in the cost of construction material). If you go that route, the insurance company will likely ask for your old policy’s declarations page to verify the information.

• Hire an appraiser: If you’re into playing it safe, you could hire an appraiser that specializes in replacement cost appraisals to get an up-to-date rebuild cost valuation. The appraiser will conduct a component-by-component analysis of the home from the ground up and give you an accurate estimate of how much it would cost to rebuild the home based on current construction materials and labor

2. Estimate the value of your personal property

You need enough personal property coverage to cover all of your personal belongings, like your clothes, furniture, electronics and jewelry. Although your personal property coverage limit is typically set at 50% of your dwelling coverage limit by default, most insurers will give you the option to increase your limit, upgrade your loss settlement terms to replacement cost instead of actual cash value, or modify your payout limits for expensive valuables.

The best way to gauge your personal property coverage needs is to take an inventory of everything you own. Inventories make it easy to categorize and value your personal belongings by room and property type. The type of items you’ll want to include in your inventory include, but aren’t limited to:

• Kitchenware

• Furniture

• Clothing

• Electronics

• Expensive valuables

• Camp and sports equipment

Most insurance companies have reimbursement limits, or sublimits on rare and expensive types of personal property. A sublimit is the most an insurer will pay out in the event of a covered loss.

Jewelry, art, furs, expensive electronics, and rare and vintage instruments typically have sublimits in the range of $1,000 to $2,500. To increase reimbursement limits on your most expensive valuables, consider adding a scheduled personal property coverage add-on to your policy.

3. Estimate the value of your assets

Personal liability coverage is the part of your policy that covers your assets in the event you’re held legally responsible for injuring someone or damaging their property. Common liability insurance claims involve “slip and falls” inside or outside the home, dog bites, and trampoline accidents. Between legal fees and the court settlement, lawsuits are expensive and can put all of your assets at risk.

Most insurers offer personal liability limits between $100,000 and $500,000 in $100,000 increments, but homeowners with a lot of risk associated with their property (say you have a pool at the edge of a cliff) or with valuable assets, like a second home or a sports car collection, should consider getting more than the standard amount of liability coverage.