You love your home. Your home is the place where you can keep your worries away and spend time peacefully after a hard days work.
But if you like most others, your home is also your single biggest asset! You can suffer a lot of financial damage when your home suffers damage from windstorm, fire or other named perils.
Insuring your house and its contents is the best way to protect yourself from such a tragedy.
How much insurance should you purchase to protect yourself from such a financial loss? A house insurance calculator can give you an estimate of the amount of coverage you require (this is also called the dwelling coverage). Here is your guide.
House Insurance Calculator
(Image by Neeraj Pattath)
House Insurance Calculator – Factors on Which Insurance Coverage Depends
Any finance website you see on the internet, you would find a house insurance calculator on it! So is determining the coverage amount a complicated process?
Well, not really. Here are the primary factors on which your house insurance amount depends.
Square footage of your home
This is understandably the single most important factor in determining the house insurance cover needed by you.
The higher the square footage of your house or apartment, the more is the likely financial damage to you in case of an incident. And therefore, the more is the house insurance coverage required.
So what does the square footage of your home include? It includes all the finished living areas on the ground floor, upper floors(s) and basement area. As a rule of thumb, it includes all areas of your home that are heated.
Contents of your house
Apart from insuring the structure of your home, you would also want to protect the valuable contents of your house. This ca include everything – from appliances and expensive electronic devices, to the smallest of gadgets. (Instead of using a regular house insurance calculator, you can also use a house and contents insurance calculator for this purpose).
Obviously, the higher the value of the contents of the house, the higher is the insurance coverage needed.
Area in which you live
The area in which you live (determined by your zip code in a house insurance calculator) determines the building cost of the house. This directly affects your likely financial loss, and therefore is a factor in deciding your house insurance amount.
Naturally, the higher the cost of building a house in your area, the higher is the house insurance cover needed by you.
Upgrades and additions to your home
Any upgrades and additions to your apartment or house increase its value, and hence increase the house insurance cover needed by you.
Stainless steel appliances, hardwood floors or granite counter tops, for example, would be considered upgrades.
Age of the property
Although not as important as the other factors, the age of your home has a bearing on the value of your home, and thus impacts the house insurance cover needed.
Understandably, the older the house, the lower should be the insurance cover required.
House Insurance Calculator – What about the premiums?
Once you know the house insurance cover required, you would start looking for premium quotes. Here are the things on which your premium amount depends:
- House insurance cover amount: Obviously, the higher the cover needed, the higher would be the premium amount.
- Damage and theft perception in your area: The more is the likelihood of damage (say coastal areas or flood prone regions) or theft, the more is the risk to the insurance company. Hence, higher would be the premium amount.
- Your credit score: Well, like all financial transactions, your credit rating effects the premium charged to you for house insurance. This is beyond any house insurance calculator, and would be determined solely by your financial institution.
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