Although the home insurance calculator should not be the end of your due diligence, it can definitely help to put a range on your budget when looking at real estate. The calculations that you can now perform easily were never available before the proliferation of the Internet, so use the resource wisely. You actually have many perspectives that you can employ from the same calculator depending on your goals. Here are six separate ways that you can plan out your budget using a home insurance calculator.
1. Should I plan my budget around my zip code?
One of the most important factors in determining the insurance that you pay is the zip code that the property is in. Everything from the crime rate in the area to the weather conditions to the average building cost will help to create your insurance costs. You will be able to research whether the insurance is actually in line with the area as well. You can also determine the level of the neighborhood by its average building cost:Â The national average for home insurance is $95.51 for every square foot of house, by the way.
2. Does the square footage of my home matter?
The home insurance cost of your real estate is partly determined by the replacement cost of your home. Houses with a large square footage obviously cost more than smaller properties; however, the quality of those square feet is also important. The actual number is determined by the average building cost in your zip code multiplied by the size of the house in square feet. The size of the lot does not matter in this particular calculation, because land does not have to be replaced after a disaster like a house does.
3. Do the upgrades on my house matter in my home insurance?
Your home insurance policy will definitely change as you build on, expand, and renovate your home. You may need a change in your home insurance if the renovations that you make substantially upgrade the value in the property. Using a home insurance calculator can help you to determine whether you need to invest in a new appraisal and a new insurance premium. A new appraisal may seem like overkill, but if something happens to your upgraded home and your insurance policy refuses to cover the new and beautiful things that you have done, you will definitely have a much bigger problem with that.
4. Do I have other structures on the property?
You have many extra costs that are associated with building a separate structure on your property. Calculating the right amount of home insurance is essential in helping to keep the value of your home stable as well as keeping the property in line with legal requirements. If you plan on adding a garage or a detached shed to your property, you will definitely need a new appraisal and likely a new insurance plan.
In most cases, the protection that your insurance gives is around 10 percent of the coverage for your main dwelling. For instance, if your primary dwelling is insured for $500,000, you may not be able to get more than $50,000 for a detached structure that is on your property. This cap is essential in determining how valuable of a structure that you feel comfortable building.
5. What about my personal possessions that are on the property?
You will need to plan a budget around the most valuable individual items in your home. Too many people believe that anything that comes through the front door is automatically protected, and this is simply not the case. None of the electronics, expensive furniture, artwork, and clothing that is in your house is protected until you ask for it specifically in your insurance policy.
You will also usually have a limit for personal property in your insurance policy as well. This protection limit will be a percentage of the total value on your home that is between a range of 50 and 70 percent. There are also additional limits for certain items like jewelry. Running the numbers here may have a definite impact on the amount of valuable items that you keep at home and what you keep in a storage center or a bank vault.
You may be able to increase your home coverage for personal property; however, you will need an endorsement. Your real estate agent and your insurance agent may need to be involved in this process, but you should definitely know the back of the napkin numbers in order to keep from wasting their time and paying for it.
6. What about a total loss of use?
If you are in a high risk area such as the California mountains, you will also need to plan your budget around a loss of use clause in your policy. If your house is deemed uninhabitable, then you will get help with living expenses until the damage is fixed. There is usually a 20 percent coverage limit based upon your home value here, and there may also be restrictions of time as well.
2 Point Highlight
You can also determine the level of the neighborhood by its average building cost:Â The national average for home insurance is $95.51 for every square foot of house, by the way.
A new appraisal may seem like overkill, but if something happens to your upgraded home and your insurance policy refuses to cover the new and beautiful things that you have done, you will definitely have a much bigger problem with that.
