How to Estimate Homeowner's Insurance
Homeowners insurance is designed to protect you in case of catastrophic loss. Homeowners insurance can cover your home and the possessions that you keep within it. It is essential to accurately estimate how much homeowners insurance you need in order to be adequately protected in the event that a disaster destroys your belongings.
Other People Are Reading
Instructions
-
-
1
Calculate the replacement value of your home. This is the value it would cost you to build a comparable home today. You can get a rough idea of the cost to replace a home by speaking to a contractor or a real estate agent or by getting your home appraised.
-
2
Calculate the replacement value of your possessions. This is the amount of money it would cost you to replace all of the items in your home. Remember, the items that you actually own may be worth less than what it would cost you to get new ones. If you want to err on the side of caution, figure the amount it would cost you to get brand new versions of each key item in your home.
-
-
3
Add in the cost of special or unique items such as jewelry, fur coats or other expensive high-value items that it would be expensive to replace. You will need to factor these in when determining the amount of insurance you need, and you will often need to list these separately on your insurance policy.
-
4
Factor in the amount of money it would cost you to live somewhere else if your home is damaged. If something happens to your house, you will need to pay hotel bills or other costs. Consider what it would take for you to live comfortably while your home is being rebuilt.
-
5
Determine the amount of liability coverage you need. Liability coverage will pay the bills if someone is injured in your home and brings a lawsuit against you. A licensed insurance agent can help you determine the amount of liability coverage you need. Those who are risk averse and/or who have a situation in which they are more likely to need liability coverage (such as a swimming pool, a dog that has the potential to bite or other such potential hazards) should err on the side of purchasing more liability coverage.
-
6
Add all of the items together. The cost to replace your home and everything in it, plus the cost to live elsewhere and to protect yourself from liability, reflects the amount of homeowners insurance that you need to purchase. When you speak with an insurance agent, let them know that you want that level of coverage.
-
1
