Homeowners Insurance Calculator

You pay a premium and the insurer agrees to cover specified losses up to your policy limits. When something happens, you file a claim, an adjuster assesses the damage, and the insurer pays the repair or replacement cost minus your deductible. A standard policy covers the dwelling, other structures, belongings, liability and extra living costs if you can't stay at home.

Generally, enough to rebuild your home at today's costs, plus cover for your belongings and liability. Rebuilding cost is usually based on square footage, materials and local labor, and your insurer can estimate it. Don't simply use your purchase price. Many people choose liability limits of at least $300,000, and an umbrella policy can add more if you have significant assets.

It varies widely with location, the home's age and rebuild cost, your deductible and your claims history. Homes in hurricane, wildfire or hail areas can cost several times more than those in calmer places. Premiums have been rising quickly in many states, so older averages may be well out of date. Get at least three quotes for identical coverage to find out what your home costs.

Lenders generally require coverage for at least the loan balance or the cost to rebuild, whichever their guidelines specify, and they require you to keep it in force. If your policy lapses, the lender can buy costly force-placed insurance and charge you for it. If you're in a high-risk flood zone with a federally backed loan, you'll also need flood insurance.

Many lenders collect your premium in your monthly payment, hold it in an escrow account and pay the insurer when the bill is due. That's why a premium increase can raise your mortgage payment, even on a fixed-rate loan. A homeowners insurance disbursement on your statement simply means the lender paid your premium from escrow.

The deductible is what you pay on a claim before insurance pays. If a covered repair costs $12,000 and your deductible is $2,000, the insurer pays $10,000. Some policies have a separate percentage deductible for wind, hail or hurricanes, such as 2% of your dwelling coverage, which is $8,000 on a $400,000 home. Choose Compare two under Deductible above to weigh a higher deductible against the premium it saves.

It's the summary at the front of your policy. It lists the insured property, coverage limits, deductibles, premium, policy dates and your mortgage lender. It's the first thing to check when comparing policies, and lenders often ask for it. Review it each renewal, because rising construction costs could leave an older dwelling limit too low.

A binder is a temporary proof of coverage issued while the full policy is being finalized. Lenders usually want a binder or similar evidence before closing on a home. It has the same effect as a policy for a short period. Your premium at closing is usually the first year's coverage, paid in advance, which is why it shows up on your closing documents.

A good premium is competitive for your home's location and the coverage you're getting. There's no universal number because risks differ so much. To judge one, compare several quotes on the same limits and deductibles, then ask about discounts for bundling, security systems, or a newer roof. A cheap policy with lower limits or big exclusions isn't actually a better deal.

Wind and hail damage are among the most frequent, followed by water damage, fire, theft and liability claims. Water damage from a burst pipe is usually covered, while flooding from outside isn't under a standard policy. Maintenance problems such as worn-out roofs and gradual leaks generally aren't covered. Knowing the common causes in your area helps you choose coverage and prevention.

Raise your deductible if you have the savings to cover it, bundle home and auto, add security or leak-detection devices, and ask about discounts for roof upgrades. In many states, your credit-based insurance score affects your rate. Shop around every year or two. Avoid cutting your dwelling limit to save money, because being underinsured is costly when you actually need it.

Often yes, if you have the savings and rarely claim. Many homeowners file a claim only once every 8 to 10 years. Going from $1,000 to $2,500 adds $1,500 to each claim. If it saves $300 a year, it only costs more if you claim more than once every 5.0 years. Many policies also have a separate wind, hail or hurricane deductible set as a percent of your coverage, which can be far higher.