Home Insurance Calculator: Estimate Your Costs

When you buy a home, you’re not just buying a home. You’re also buying homeowners insurance.

While homeowners insurance isn’t technically required by law, it is required by most mortgage lenders. Without coverage, they’ll likely deny your mortgage loan application—but that’s not the only reason you should invest in a policy.

Financially speaking, homeowners insurance can offer protection for both your property and personal belongings should a catastrophic event leave unforeseen and incredibly expensive damages behind.

The national average cost of homeowners insurance right now is $1,312 per year for up to $250,000 in dwelling coverage. However, the amount you pay will vary significantly from the next person as coverage costs depend on several different factors.

So, how do you estimate the cost of your future homeowner’s policy?

Read on to find out more.

How to Estimate Your Home Insurance

As mentioned above, several different factors go into homeowners insurance coverage. There are also eight types of homeowners insurance, from basic to modified forms, plus renters insurance.

Of course, renters insurance is different than homeowners insurance in that the building you’re renting from will typically have coverage, and the renters policy you take on is mostly designed to protect you when it comes to physical injury and your belongings from theft or damage. 

The most common types of homeowners insurance include HO-1, HO-2, HO-3, and HO-5—with HO-5 being the most comprehensive. 

Your monthly premium and deductible will mostly depend on which type of homeowners insurance you choose. Ultimately, the type you choose will depend on the type of coverage you feel is best for your home, property, and overall location.

Having said that, here are the steps you’ll need to take to estimate your potential homeowners insurance costs:

Determine How Much Coverage You’ll Need

Homeowners insurance policies typically include six major components. There is a range of options when determining the amount of coverage you want for each component, but here’s what you’re looking at:

  1. Dwelling Coverage, which pays out for any damages that affect the main structure of your home
  2. Other Structures Coverage, which pays out for any damages caused to structures apart from your home, such as fences and sheds
  3. Personal Property Coverage, which pays out for your belongings that are damaged or stolen up to a certain amount
  4. Additional Living Coverage, which pays out if you need a temporary residence elsewhere while your home is under repairs
  5. Medical Coverage, which pays out for medical expenses should you, a guest, or a pet become injured—or cause an injury—on your property or elsewhere
  6. Liability Coverage, which pays out if you cause property damage elsewhere  

The rule of thumb here is that you need enough dwelling coverage to completely rebuild your home if necessary. 

As for the rest of the components, they’re typically calculated as a percentage of your dwelling coverage. Usually 10% for other structures, between 50% and 70% for personal property coverage, and up to 20% for additional living expenses. 

Liability coverage usually starts at $100,000 but can be more depending on what your needs are. Lastly, medical coverage is usually between $1,000 and $5,000, but it can be higher.

So, start calculating your expenses by how much it would cost to rebuild your entire home.

Choose the Right Insurance Deductible

Your insurance deductible, as you probably already know, is the amount you’ll need to pay out of pocket for covered claims before the insurance kicks in to help. 

Homeowners insurance deductibles typically range anywhere from $500 to $2,000. Additionally, the higher your deductible, the lower your monthly premium will be. Once again, this choice will be based entirely on your needs and what you’re able to budget each month.

Keep in mind that your deductible will only pay out a certain amount for certain damages. For example, your homeowners insurance theft deductible will only pay out $2,000 if the deductible is $500, but the total loss was worth $2,500.

Evaluate Other Factors

Not everything in your homeowners insurance policy will be a direct choice. As mentioned earlier, several factors will go into determining how much coverage you can get and for what.

Those factors include the following:

  • The age and condition of your home
  • Your location
  • The condition of your roof
  • Compliance with your town’s current building codes
  • Whether or not you have a swimming pool—if you do, it’ll likely require additional liability coverage
  • Your home’s proximity to the coast
  • The average weather year-round

Other things that factor in may include the quality of your local fire safety unit, police force, criminal activity, and anything else that can contribute to damages or theft. 

Consider Getting Supplemental Coverage

While you can get more comprehensive coverage by choosing a broader policy, most standard homeowners insurance policies won’t cover damages from natural disasters like floods or earthquakes and several other exclusions.

However, you can likely find supplemental coverage for most exclusions—which is necessary if your home is at risk for damages caused by weather systems, government action, infestations, nuclear hazards, and so on. 

Of course, supplemental coverage is most commonly purchased for natural disasters. If you live in a hurricane-prone state, you’ll want to consider adding windstorm and hurricane coverage onto your policy for extra protection.

Get a Quote

Once you’ve estimated the general amount you’ll need for dwelling coverage and supplemental policies and calculated your budget, the next thing you’ll want to do is get a quote.

Most home insurance providers offer free tools to help you estimate how much your homeowners insurance will cost. While their features are somewhat limited in terms of the factors mentioned above, it’s a good way to get an idea of how much your quote should look like.

Once you have a sense of your potential costs, you can shop around and get quotes from various insurance companies. The quote you get from, say, Personal Express homeowners insurance will be different from another company. Keep in mind that a quote is not a definitive price, but it’ll allow you to narrow down your search and then speak more in detail about your needs and what you can afford with each insurance provider before making a final decision