Calculating Your Home Insurance Needs

Figuring out how much Home insurance you will need down to the exact penny is probably not going to happen.

However, you can use the below home insurance cost estimator to get a strong idea about the amount of coverage and deductible you may need.


Between 2013 and 2017, the average property damage claim was $12,322. 

Wind and hail claims were the most numerous, while fire and lightning damage cost the most.

About one in twenty insured homeowners filed a claim.

how much home insurance do i need

Your home is the center of your life. Aside from the fact that you raise your kids and build your memories there, it may be the most significant financial investment that you have.

It is vital that you protect it—but if you don’t have an understanding of what homeowners insurance is and find yourself asking, “how much home insurance do I need?” that task may seem daunting.

In this post we will go over how to figure out the amount of coverage you need and show you how to get covered fast. 

​In This Article



How Much Home Insurance Do I Need?

Home insurance policies come with different levels of coverage. As with nearly all insurance questions, the answer to “how much should I insure my home for?” is—it depends.

Homeowners insurance covers a range of damage types. Knowing those coverage options will help you understand how much coverage you need.

  • Dwelling coverage: In this case, the “dwelling” is your home. It also often includes attached structures, such as a garage that isn’t in a separate building. You want this value to reflect the cost of rebuilding your home. We’ll discuss this in greater depth below.
  • Other structures: This part of your insurance covers things like a detached garage, fences, swimming pools, and your driveway. It is typically 10 percent of your dwelling coverage.
  • Personal property: Your personal property is everything you own and store in your home.
  • Loss of use: When you are unable to use your home due to a catastrophe, loss of use kicks in. It will help pay for any costs above your regular monthly budget, including hotel costs, extra mileage, and meals, among other expenses.
  • Personal liability and medical payments: These two go hand in hand. Liability pays for legal fees if a guest is injured while in your home, and they sue you. Your guest’s medical expenses are also covered.

To determine how much coverage you need, estimate what it would cost to rebuild your home and replace all your belongings.

The other parts of your policy are determined based on those numbers.

THE SIMPLY INSURANCE WAY

Home Insurance made easy.

Agents not required.

Get quotes and sign up online without talking to an agent. But, we are here if you need us.

Unbiased, expert advice.

Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.

Coverage in minutes.

You can get home insurance coverage within minutes of getting your quotes and applying.

How Much Home Insurance Do I Need for a Condo?

If you live in a condo, your insurance needs are different. You should first contact your condo association to get a copy of their insurance.

If their coverage is all-inclusive and covers the exterior and interior surfaces as well as fixtures and things connected to the walls, all you’ll need is personal property coverage.

However, if their policy only covers the exterior of the building and excludes anything within the unit (a "bare walls" policy), you’ll need to get a homeowner’s insurance policy.

The steps to determining your coverage amount are the same as those posted above.

How Much Home Insurance Do I Need for a Townhome?

Your townhome insurance amount will depend on the type of townhome it is. 

If you own your townhome, homeowners insurance is appropriate, but if you live in a condominium with an HOA, you’ll need to base your insurance coverage on theirs, unless you’re renting.

If you are renting your townhome, renters insurance is the best option.

How Much Home Insurance Do I Need When Dealing with a Co-op?

Condos are private residences in a multi-unit structure, while co-ops are a multi-unit structure, and the residents share ownership and responsibility for the entire building.

Insurance for a co-op should focus on the interior of your unit. The co-op association should have an insurance policy that covers everything else.

As always, it’s best to get a copy of the co-op’s insurance so that you can make educated decisions when it comes to your insurance policy.

How Much Home Rebuild Coverage Do I Need?

This figure should amount to the cost to rebuild your home exactly as it is now—not the market price or resale value. Your insurance agent will be able to assist you in determining this number.

You can also use our handy home insurance calculator.

What Factors Impact My Home Rebuilding Cost?

Several factors impact the number you want to meet when determining your dwelling coverage:

  • Exterior wall type
  • Any recent renovations
  • The style and age of your home
  • Your roofing material and style
  • The number of bathrooms
  • Increased groceries or food costs above your usual spending
  • Any specialized or custom features

​Should You Get Extended Replacement Cost Coverage?

If a disaster destroys your home, your insurance company will pay up to the level of dwelling coverage, minus your deductible.

However, if prices increase (as they might after a natural disaster when materials are more in demand), your dwelling limit may not fully cover your costs. 

You can get an extended or umbrella policy, that will increase your dwelling coverage by 25 to 50 percent.

If you want peace of mind, consider adding one of these policies to your home insurance coverage. Speak to your agent for further information.

INSURANCE WHERE YOU LIVE

Home insurance by state.

How Much Personal Property Coverage Do I Need?

Personal property coverage should cover the cost to replace everything in your home—that includes appliances, rugs, furniture, clothing, etc.

This amount usually equals 50 percent of your dwelling coverage. We recommend you take an inventory of your belongings and estimate their replacement value before building your policy. That way, you’ll know if that 50 percent determination is appropriate.

Most policies only cover your personal property at their replacement value. In other words, the value of your belongings depreciates over time. Your insurance company will pay you the depreciated value if you stay with basic coverage.

Consider increasing your coverage to a replacement cost level. While it costs more, you will get the money to replace your items at their current value.

For example, if your TV is five years old, it is worth less than it was new. By insuring it at the replacement cost, your insurance company will pay its full replacement value rather than the depreciated amount.

If you have high-value items or collections, it is also wise to insure them under separate policies rather than increase your personal property coverage level.

How Much Personal Injury Coverage Should I Get?

Lawsuits are expensive. If someone decides to sue you after an injury or property damage while in your home, they may go after your assets as well.

You should have, at minimum, enough insurance to cover your assets, including your home and personal property.

home insurance calculator

If your assets are more valuable than the personal liability limits your insurance company offers, we recommend purchasing an umbrella policy to increase the amount of coverage you carry. 

THE SIMPLY INSURANCE WAY

Home Insurance made easy.

Agents not required.

Get quotes and sign up online without talking to an agent. But, we are here if you need us.

Unbiased, expert advice.

Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.

Coverage in minutes.

You can get home insurance coverage within minutes of getting your quotes and applying.

What Other Insurance Coverage Might I Need?

When deciding whether you need any additional coverage, consider the value of your home and assets, as mentioned above.

You should cover things like engagement rings, investment metals, and art collections with their own policy.

If you live in a place that has frequent or recurring natural disasters, insuring your home against them is wise.

For example, in California, earthquake insurance is a must, while Louisiana residents should consider flood insurance.

Speak to your insurance agency or agent to see what is available.

Taking Action

Finding the right homeowners insurance policy doesn’t have to be complicated.

Now that you understand what each part of your homeowners insurance policy covers, you have an idea of how much insurance you need. 

If you want to update your homeowners insurance, we’ve done the hard work for you—check out the top three companies or get your free quote for homeowners insurance today!


Sa El

About the author

Sa El is the Co-Founder of Simply Insurance and a licensed Insurance Agent with over 11 years of experience in the industry.  He specializes in Life & Health Insurance and is certified in Long Term Care Insurance in the state of Georgia. He is also an Official Member of the Forbes Finance Council, a licensed real estate agent in the state of Georgia (License #382602), an entrepreneur, insurance educator, and freelance writer.

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