Homeowners insurance protects your home and assets against any unexpected damages. It typically covers the amount required to rebuild your home, replace your belongings, and your living expenses if your home is uninhabitable. It is imperative to obtain homeowners insurance prior to your move because your home is likely your biggest investment.
There are different types of homeowners insurance. Whatever coverage you choose, you must set the limits of your coverage high enough to cover the cost of damages or losses when re-building your home.
However, determining your coverage amount might be an arduous task. The amount required to rebuild your home can be more or less than the current market price or your mortgage. Most people consult an insurance provider or a nearby homeowners insurance company to learn about how much homeowners insurance you will need. We’ve provided you with some information that will help decide the amount of coverage you need.
Factors that Determine Rebuilding Costs
A homeowners insurance policy is calculated based on the square footage of your home and the estimated cost to rebuild it. You can get a rough estimate of your insurance coverage amount by multiplying the total square footage of your home by local, per-square-foot building costs. However, the actual cost of rebuilding your home may vary. The type of homeowner’s insurance you need also depends on a few other factors. These can include:
- The geographical location of your home. This determines the cost of the materials and construction.
- The exterior and interior of your home. You must consider the frame or the type of masonry used when calculating the amount.
- The condition and age of your home.
- The architectural style of your home. Construction costs may vary based on the style of your home. Different styles include ranch, bungalow, or colonial.
- The total number of rooms and bathrooms in your home. When you calculate the construction costs, also consider the amenities within the room.
- The type of roof and the materials used to construct it.
- Detached additional structures within the property like a garage, shed, or fence.
- Unique amenities or custom-built areas within the house. These can include fireplaces, bar counters, arched windows, etc.
- Upgrades you’ve made to your property that have increased its value. These can include an additional bathroom or kitchen renovation.
- Your insurance policy deductibles.
- Your credit score and previous claims.
Steps to Determine Your Homeowners Insurance Amount
In most cases, standard homeowners insurance provides you with 50-70 percent coverage. Often people calculate the insurance amount based on the property’s market value or the mortgage amount. At times, this might not be enough to meet your building requirements. Here are some additional steps that you can follow before determining your coverage amount.
- Calculate the rebuilding cost. Determine the square footage of your home and find out the average construction costs per square foot in your area. Multiply both to find the average replacement cost. While calculating the price, you must always consider that construction costs may increase in the future. So keep the estimate a little higher than your exact figure.
- Determine the cost of materials used to build your home and anything attached to it. This can include a garage, deck, or front porch. Also, calculate the amount for remodeled kitchens and additional rooms. Finally, you can add this to the replacement costs to determine your dwelling coverage.
- Make an inventory of your personal properties like furniture, electronic appliances, clothes, and other equipment. This will not only help you calculate your personal possession coverage, but it also makes filing claims easier.
- Check the limit of your life insurance policy and add extra coverage for any expensive belongings.
- Check the possible liabilities that could be caused due to injury or liability within your property. This includes any dog bites or accidents that occur on the premises. Make sure that the insurer has not flagged your dog’s breed. If insurance companies have flagged your dog’s breed as high-risk, any injuries or damages involving your dog will not be covered by your homeowner’s insurance.
- Plan for additional expenses if your home is damaged and is no longer inhabitable. With Additional Living Expense coverage, you will be able to afford any rental and food expenses while your home is being repaired.
- Calculate a rough estimate of these liabilities and consult an insurance provider to find the homeowner’s insurance that is right for you.
Although homeowners insurance is a necessity, you can cut the cost of the insurance premium using the following tips:
- Maintain a well-monitored security system
- Raise the deductible
- Pick up multiple policies from the same insurance company as most insurance providers give discounts on premiums if multiple policies are purchased.
- Have a plan for expenses before renovation
- Pay off your mortgage
- Review your policy at regular intervals and compare it with other policy providers.
Expert assistance to get maximum benefits
Homeowner’s insurance is incredibly essential for protecting your home. It is important to have a good idea understanding of the types of homeowner’s insurance and what each policy entails before you purchase one. Educate yourself on coverage limits, deductibles, etc.
If you are still confused about the amount of homeowner’s insurance, you should purchase, contact us to get the best insurance quote for your home! We are one of the best insurance providers in Texas. We offer standard homeowner’s insurance, seasonal home insurance, and vacant home insurance. Contact TX Insurance Quotes now!