Home Insurance Calculator

Homeowners Insurance Calculator: Estimate Your Costs

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When you purchase a home, the cost of the property itself isn't the only expense you need to factor into your budget. Other mandatory expenses include homeowners insurance, and protecting your property against many disasters, including fire damage and vandalism. While it might not be your biggest expense, average rates for home insurance in the US are $1,211 per year.

Getting a home insurance quote from an independent insurance agent can help you understand what your costs could look like. A calculator can also help you understand what factors determine home insurance rates. Here's a breakdown of homeowners insurance and how costs are calculated.

Homeowners Insurance Cost Calculator

Factors Used to Calculate the Cost of Homeowners Insurance

How is homeowners insurance calculated? There are several factors to keep in mind when considering the cost of homeowners insurance. The age and value of your home impact your rates, but several other factors do, as well. 

Factors used by insurers when calculating home insurance costs:

  • Location: Your location impacts your home insurance rates because of factors like property values, crime rate in the area, flood risk, etc.
  • Property features: Many specifics about your home, including the materials used to build it, your property's age and value, the age and condition of your roof, the overall square footage, and more also factor into premium costs.
  • Coverage amounts: The more coverage you need, the more your policy will cost.
  • Deductible amount: In contrast, the higher the deductible amount you select, the lower the cost of your home insurance premiums.
  • Credit score: The higher your credit score, the lower your cost of coverage is likely to be, because insurance companies will see you as less likely to file a claim.
  • Claims history: With no prior claims history, your home insurance premiums can be lower, whereas if you've already filed multiple claims, your costs will be higher.

An independent insurance agent can further explain the many factors that go into determining the costs of home insurance.

How to Estimate Your Home Insurance Coverage Cost and Needs

To calculate homeowners insurance coverage costs, you'll need an estimate of the home's replacement cost. You'll also need to know the value of the home's contents, or your personal property kept inside and around the home. Knowing these values will help you understand how much coverage is needed in every area of a home insurance policy.

Estimate How Much It Would Cost to Rebuild Your Home

One of the main purposes of home insurance is to protect the dwelling, or structure, of your home from many different incidents like vandalism, fire damage, falling objects, etc. That makes having enough dwelling coverage crucial. The coverage in the dwelling category of home insurance must be substantial enough to cover the entire value of rebuilding the home, should it get destroyed.

When calculating your dwelling coverage limits, you'll need to make sure you factor in the replacement cost of your property, or the cost to rebuild your entire home from the ground up. This doesn't mean the cost of your home's remaining mortgage value or its current market value. You can ask your independent insurance agent for more information on ACV vs. replacement costs.

Estimate the Value of Your Personal Belongings

Your home insurance policy will also need to have enough coverage for your personal belongings or contents, including electronics, clothing, kitchen appliances, artwork, jewelry, etc. Having an updated list of your personal possessions can help simplify the process of filing home insurance claims. Taking photos of your more important or expensive items is also helpful.

Estimate the Value of Your At-Risk Assets

It's critical that your home insurance policy includes enough coverage for the combined value of everything you own in case you get sued for causing injury or property damage to someone else. Make sure you have coverage that factors in special vehicles like boats, cars, business assets you own, investment real estate, saved money, and other personal belongings. Without enough coverage, you could stand to lose your assets after just one hefty lawsuit.

Determine How Much Home Insurance Coverage You Need

After you've figured out values for the above recommendations, you can then set your home insurance coverage limits. Standard home insurance policies include six important types of coverage, which protect not just the building, but also the home's inhabitants and contents. To calculate how much home insurance you need, you'll have to consider how much coverage is right for you in each area. 

Standard homeowners insurance typically comes with the following:

  • Dwelling coverage: Protects the structure, or dwelling, of the house against many disasters, including fire damage, lightning, wind and hail, vandalism, and more. 
  • Other structures coverage: Protects structures that are detached, like sheds, garages, etc. from the same perils as the dwelling is covered against. Coverage is typically just 10% of the dwelling category's limit.
  • Contents coverage: Protects the items you store in and around your home, and sometimes even away from the home, like furniture, clothing, collections, etc. from many disasters including fire damage and theft.
  • Liability coverage: Protects you against lawsuits filed by third parties for claims of bodily injury or personal property damage while on your property, as a result of you or your property, or even while away from the home. 
  • Medical payments coverage: Protects you against costs of someone else's injury at your home, no matter who caused it. 
  • Loss of use coverage: Protects you against additional expenses if you're forced to live somewhere else, like a hotel, while awaiting repairs on your home for a covered cause. 

An independent insurance agent can further explain the critical core coverages provided by standard homeowners insurance nationwide and how much you need of each. 

Factors Used to Calculate the Cost of Home Insurance

The current average cost of home insurance nationwide is about $1,211 annually. But the cost of your policy will vary depending on a few factors, including your location.

Here are some factors that determine the cost of your home insurance, and how:

Factor Description Impact on Home Insurance Costs
Location Including all 50 states and DC Some states pay more for coverage due to increased risk of crime or natural disasters, or due to higher property values.
Building age The exact age of your home's construction, from less than 30 years old to more than 50 years old Older homes pay more for home insurance than newer homes.
Home value The value of your home, ranging from less than $50,000 to more than $500,000 The more valuable your home, the more expensive its coverage will be.
Credit score Your average credit score, ranging from poor/don't know to excellent The better your credit score, the cheaper your home insurance premiums will be.
Claims history The amount of claims you've previously filed through your home insurance The fewer claims you've filed, the lower your premiums are likely to be, and vice-versa.

Average Cost of Home Insurance By State

When calculating home insurance rates, location is one of the biggest impacting factors. The state you live in affects how much you pay for home insurance, since certain areas have higher threats of flooding, storm damage, or crime, and some areas just have higher property values in general. A few states tend to pay much more for home insurance than others, including:

  • Texas
  • Oklahoma
  • Rhode Island
  • Florida
  • Kansas

Homeowners in Texas can pay an average of $1,893 for home insurance annually, while homeowners in Ohio only pay $862 each year for coverage. Be sure to check out your specific state's average rates for homeowners insurance before you start shopping for a policy, to avoid any potential shocks.

State Average Cost of Home Insurance
Alabama $1,433
Alaska $959
Arizona $825
Arkansas $1,373
California $1,008
Colorado $1,495
Connecticut $1,479
D.C. $1,235
Delaware $833
Florida $1,951
Georgia $1,267
Hawaii $1,102
Idaho $730
Illinois $1,056
Indiana $1,000
Iowa $964
Kansas $1,584
Kentucky $1,109
Louisiana $1,968
Maine $882
Maryland $1,037
Massachusetts $1,488
Michigan $942
Minnesota $1,348
Mississippi $1,537
Missouri $1,285
Montana $1,174
Nebraska $1,481
Nevada $755
New Hampshire $972
New Jersey $1,192
New Mexico $1,017
New York $1,309
North Carolina $1,086
North Dakota $1,253
Ohio $862
Oklahoma $1,885
Oregon $677
Pennsylvania $931
Rhode Island $1,551
South Carolina $1,269
South Dakota $1,202
Tennessee $1,196
Texas $1,893
Utah $692
Vermont $918
Virginia $999
Washington $854
West Virginia $940
Wisconsin $779
Wyoming $1,159

FAQ about Calculating Home Insurance

The formula to calculate homeowners insurance includes a few easy steps, starting with estimating the home's value. Next, you'll calculate the value of your property insurance with the help of an independent insurance agent. You'll then be provided with several quotes for reliable coverage in your area. Afterward, your independent insurance agent might suggest adding extra coverages you need, like earthquake insurance or flood insurance, to complete your policy. 

The square footage of your home can absolutely influence your homeowners insurance costs. Larger homes have more area to repair or replace in case of a major disaster, so the premiums must be higher to compensate.

Your home insurance rates may be high for a few reasons, such as if you chose lower deductible amounts when purchasing coverage. But home insurance costs may also be high because you own an older property, have "attractive nuisances" at your home like trampolines or pools, don't have safety features like burglar alarms installed, or have prior claims history.

The three basic coverage levels of homeowners insurance are actual cash value (ACV), replacement cost, and extended replacement cost (ERC). ACV factors in the depreciation of property when granting you reimbursement for a claim, whereas replacement cost grants your reimbursement by considering the price of giving you a new, similar item in the current market.

ERC will pay to rebuild your home or replace property regardless of inflation, basically making your property the same as it was before the disaster occurred. ERC protects homeowners against inflation rates and increases in the cost of materials needed to repair the home and will pay for repairs even if they exceed the home's value.

Typically yes, even if you haven't filed a claim, your home insurance costs will still increase every year. For local tax authorities to be able to continue to improve road systems, schools, etc., your annual property tax and insurance costs continue to increase as well. With rising inflation rates, it becomes more expensive over time to repair your home.

Also, as your home ages, it gets more expensive for insurers to cover it due to the increased risk factor. If you've filed claims before, your premiums are certain to go up. But even if you have no prior claims history and your insurance company received claims from others in your area, your rates could still increase.

Why Choose an Independent Insurance Agent?

It’s simple. Independent insurance agents simplify the process by shopping and comparing insurance quotes for you. Not only that, but they’ll also cut the jargon and clarify the fine print so you know exactly what you’re getting.

Independent insurance agents also have access to multiple insurance companies, ultimately finding you the best home insurance coverage, accessibility, and competitive pricing while working for you.

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TrustedChoice.com Article | Reviewed by Lloyd Foster

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