Edit your information
Home Insurance Calculator
MoneyGeeks's home insurance calculator will give you a ballpark estimate of your home insurance cost - it's free, no personal information required, no spam.
Sep, 21, 2023
Edit your information
Free and simple - Your information is secure.
Why You Can Trust MoneyGeek
MoneyGeek partners with some of the companies we write about. However, our content is written and reviewed by an independent team of editors and licensed agents.
Ave. Premium Amount Monthly
Edit your information
Why You Can Trust MoneyGeek
The MoneyGeek partners with some of the companies we write about. However, our content is written and reviewed by an independent team of editors and licensed agents. Reference our data methodology and learn more about how we make money.
Table of Contents
Factors Used to Calculate the Cost of Home Insurance
Insurance providers consider various factors when calculating your home insurance policy premium, such as when and where your home was built, what environmental hazards there are, how much your home is worth and more. For instance, if you live in an area prone to wildfires, you might have to pay more for insurance.
Other factors that affect your home insurance costs include:
Your Coverage Level
How much home insurance coverage you have plays a significant role in your costs. Getting high dwelling coverage limits or personal property limits can increase how much you pay annually.
A home insurance policy’s deductible is the cost you pay out of pocket before your insurer steps in to cover repairs and replacements. Increasing your deductible can lead to lower monthly rates, but it also means you need to have enough saved to pay up if an emergency happens.
Your Home’s Location
Insurers consider where you live and the environmental hazards of your area. Living in an area prone to earthquakes, tornados or floods, or in an area with a higher theft rate or population density can affect your rates.
Your Home’s Age
Older homes typically come with higher premiums, as the cost to repair damages may be higher due to outdated materials or systems. Conversely, newer homes are often cheaper to insure due to their modern systems.
Your Credit Score
In most states, insurers will consider your credit score when setting your premium. However, in California, Maryland and Massachusetts, insurers are not allowed to use credit scores as a basis to determine your rates.
Your Claims History
Having a frequent history of claims can affect your rates. Claims typically stay on file for three to five years.
Home Insurance Estimates by Coverage Level
Insurers calculate your home insurance premiums based on the limits of your desired dwelling coverage, which pays to repair your home, and personal property coverage, which replaces your personal belongings. Higher limits often translate to more expenses — $1 million in dwelling coverage, for instance, costs an average of $7,947 per year, $5,333 more than the cost of a policy with $250,000 in coverage.
Understanding how home insurance rates are calculated by coverage level allows you to tailor your policy to both current needs and future contingencies, ensuring you get the best value. Use the table below to see home insurance estimates for different coverage levels.
Home Insurance Estimates by State
Aside from your home’s value, location is one of the most significant factors impacting home insurance coverage and costs. This is because your location has a lot to do with how insurance companies calculate potential risks. For example, if you live in an area prone to natural disasters like hurricanes or wildfires, you can expect your premiums to be higher.
Similarly, if you live in an area with a high crime rate or an elevated risk of burglary or vandalism, you’ll likely end up paying more for home insurance. On the flip side, if you live in a safe area with few risk factors, your premiums will typically be lower.
Rates fluctuate because different states have varying risks and regulations. For instance, coastal states might have higher premiums due to the increased risk of hurricanes or flooding, while states in the Midwest might see elevated rates because of tornado threats.
The presence and competition level of insurance companies in a state can also lead to variations in average premiums. Some states might have a plethora of providers, fostering competitive pricing, while others might have limited options, leading to higher average costs. Additionally, the local cost of living and construction can influence repair and replacement expenses, further impacting rates.
How to Calculate How Much Home Insurance You Need
How much home insurance you’ll need depends on your unique circumstances, including how much your home is worth, what it would cost to rebuild and how much savings you have. When determining how much coverage to purchase, you’ll need to decide what limits are best for you for dwelling, personal property and personality liability coverage. You’ll also need to consider whether or not other coverages — such as flood or earthquake insurance — are appropriate.
Establish Your Dwelling Coverage
Dwelling coverage covers damage to your home’s physical structure. In general, you should aim for your dwelling coverage to equal the cost of replacing your home if a disaster destroys it. For example, if your home would cost approximately $200,000 to rebuild from the ground up, you purchase that same amount of dwelling coverage or a bit more to add some buffer.
If you aren’t sure how much it would cost to rebuild your home, contact a professional prior to purchasing insurance to avoid being under or overinsured.
Determine Your Personal Property Coverage
Personal property coverage covers damage to all personal property and possessions inside your home. This can include everything from valuable furniture items and electronics to jewelry and more.
To determine how much personal property coverage you need, you should make an inventory of your personal belongings and estimate what it would cost to replace them. This number is what you should aim for as a personal property coverage limit. In some cases, your insurer will automatically set your personal property coverage at 50% of your dwelling coverage.
Determining the right amount of personal property coverage is simpler with a comprehensive home inventory. There are several methods for creating home inventories, including:
- Digital Documentation: Use a smartphone or camera to capture each room. Focus on valuable items — note their serial numbers and unique features. Store these files on cloud storage or an external drive for added security.
- Mobile Apps: Opt for specialized home inventory apps. They allow for cataloging easily, attaching photos and saving digital receipts, streamlining the entire process.
- Traditional Approach: Use a spreadsheet or notebook to list items room by room. Include descriptions, purchase dates and estimated values. Pair this with printed photos for a complete record. Store this inventory in a secure location, like a fireproof or safe deposit box.
Set Your Personal Liability and Medical Payments Coverage
Personal liability insurance is designed to protect homeowners from financial liabilities should they unintentionally cause harm or damage. When deciding on the amount of personal liability coverage for your home insurance, it's essential to consider various factors:
- Evaluate the assets you wish to protect, such as your home, savings and investments. The more assets you have, the higher the coverage you might need to shield yourself from potential lawsuits.
- Think about the potential risks associated with your property. Do you have a swimming pool, trampoline or other features that might increase the likelihood of injuries?
- Consider the area you live in; some regions have higher lawsuit costs than others.
Remember: while it's tempting to opt for the minimum coverage to save on premiums, it's crucial to ensure you're adequately protected to avoid significant financial setbacks in the event of an unforeseen incident.
If you're having trouble determining how much personal liability and medical payments coverage is appropriate for you, consult an insurance agent or financial advisor who can provide insights tailored to your specific situation.
Consider Other Coverages
While the core components of home insurance, such as personal liability and personal property coverage, are essential, there are additional coverages available that homeowners might overlook. These can be crucial depending on individual circumstances:
- Flood Insurance: Standard policies often exclude flood damage. If you reside in a flood-prone area, this separate policy is invaluable.
- Earthquake Insurance: Similar to flood coverage, earthquake damage isn't typically covered by standard homeowners insurance policies. Those in seismic zones should consider purchasing this additional coverage.
- Sewer Backup: This covers damages when sewers or drains back up into your home, a scenario not usually included in basic policies.
- Valuable Items Endorsement: If you possess high-value items like jewelry or art, standard policies might not offer sufficient coverage. An endorsement ensures these items are fully protected.
By exploring these additional coverages, you can tailor your insurance to your unique needs, ensuring comprehensive protection for every aspect of your home and belongings.
How to Purchase Home Insurance
After carefully evaluating your needs, getting a home insurance quote online is a quick and easy process that can help you find the best home insurance companies for your needs. Understanding the steps to buying a policy ahead of time can expedite the process.
Assess Your Requirements
Determine the amount of coverage you need for your dwelling, personal items and potential liabilities.
Set Coverage Limits
Opt for limits that would adequately finance the replacement of your assets.
Think Beyond the Basics
If your home is located in an area prone to hazards, like floods or earthquakes, you should also consider purchasing additional insurance coverage, including hazard, flood and earthquake insurance.
Compile Your Personal Information
In most cases, you can fill out a short form on the insurance company’s website with your personal information to get a quote. You can also provide personal information by phone or in-person to receive sample premiums.
Explore Your Options
Every insurer offers something unique. Take a moment to compare home insurance quotes and find what fits with your budget and coverage needs.
Choose a Provider
Settle on your preferred policy, payment arrangement and initiation date.
Seal the Deal
Complete your application and pay your initial premium.
To get a quote online, in person or by phone, you’ll need to provide some basic information about yourself and your home, including:
- Personal information (name, date of birth, Social Security number)
- Your home’s address
- Recent renovations or repairs
- The age and condition of your home
Expert Advice on Estimating Home Insurance Costs
MoneyGeek consulted with industry experts to share their insights about the best ways to estimate your home insurance costs.
- What's the best way to estimate my home insurance costs?
- How do companies calculate home insurance?
- Are online home insurance quotes from insurance companies finalized quotes or estimates?
Associate Professor of Business / Director of Assessment at Bryan College
Assistant Professor at the University of Houston-Downtown
Department of Finance, Real Estate and Law at Cal Poly Pomona
President, Petschauer Insurance
Learn More About Home Insurance
About Mark Fitzpatrick