Estimating homeowners insurance costs starts by valuing your home.
Homeowners insurance is not only a good idea, but is in most cases a lender-based requirement. Failing to get it on your own usually means your lender will get it for you, although with a level of coverage that may not suit your needs and at a higher-than-average cost. Protect your new home and save money by starting to shop for homeowners insurance as soon as you have a signed purchase contract. Before getting any quotes, however, take some time to assess your needs, look at available options and estimate, as best you can, what your homeowners insurance will cost.
Estimating insurance costs starts by finding the replacement value of your home. Expect this amount to be lower than the purchase price because replacement costs exclude land. Look at a current appraisal or consult with a building contractor or your real estate agent to get this information. Next, create or review and, if necessary, update a home inventory to assist you in estimating the value of your personal possessions. From there, decide whether you want to insure your home and possessions for replacement value – which does not consider depreciation – or cash value – which does consider depreciation. Most policies use replacement value on the dwelling and cash value on personal possessions.