How to estimate homeowners insurance

How to get home insurance estimates

To estimate your homeowners insurance needs, calculate your home's replacement cost, inventory your personal belongings, choose appropriate liability limits, and select a deductible you could afford after a covered loss. These figures provide a starting point for comparing quotes, but your insurer can help decide the amount based on your home's features, location, construction costs and financial situation.

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.

Don't use your home's purchase price or market value as a substitute for replacement cost. Market value includes the land's value, while dwelling coverage is designed only to cover the cost of rebuilding the structure. 

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

Your personal property coverage protects belongings such as furniture, clothing, electronics and other possessions. Standard homeowners policies have a personal property limit equal to 50% to 70% of the dwelling coverage.

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. 

Pay special attention to valuable items such as jewelry, art, collectibles and other high-value property. Standard policies have special limits for certain types of personal property, so you might need a scheduled personal property endorsement or other additional coverage. 

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)

Your personal liability insurance pays out when you or a family member is legally responsible for others’ injuries or property damage. Most home insurance policies come with $100,000 in personal liability insurance, but most experts recommend upping your limits to at least $300,000.

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

Additional coverage helps fill gaps in a standard homeowners policy based on your property, location and financial needs. 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.

Coverage availability varies by insurer and state. Some risks, such as flood and earthquake damage, require separate flood insurance or an endorsement because they are not included in standard homeowners coverage.

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.

Some homeowners policies also have percentage-based deductibles for certain weather events, such as wind or hail, depending on the policy and location. Read your policy carefully so you know which deductible applies to each type of loss. 

Comparing home insurance quotes

Compare homeowners insurance quotes using the same coverage limits, replacement-cost basis, deductibles and endorsements so you can make a meaningful price comparison. Getting several quotes can help you find competitive rates, but the cheapest policy isn't necessarily the best value if it provides less coverage. 

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

• Home insurance calculator
• Condo insurance calculator
• Renters insurance calculator
• When to file a home insurance claim