First Person: Calculating Accurate Homeowners Insurance

Yahoo Contributor Network

Calculating accurate homeowners insurance may seem like a no-brainer, but very few people actually take the time to add up the costs of their home and all their belongings. To calculate an accurate amount for a homeowner's insurance policy, I have to take into consideration the value of my home and what it would cost me to replace or rebuild my home, my appliances, furniture, jewelry, clothing, collections, home office and outbuildings.

The House

How much would it cost to completely rebuild or replace your current home with a new home? I currently live in a 1,500 square foot double-wide, which offers me some leeway assuming I lost my home due to a fire, tornado or other harsh storm. If I wanted to replace my current dwelling and its square footage, I can expect to pay $30,000 to $35,000 for a new double-wide. I can purchase a used double-wide or a new single-wide for $25,000, and I can purchase a move-in ready, used single-wide for $5,000. My home's value is directly related to my future home desires in the even that my home is destroyed via a covered event. Right now, my home is insured for $5,000. I just need another place to live if this home is rendered uninhabitable.

Appliances

Before I purchased my home owners insurance, I walked around my home and wrote down all my appliances. I have a hot water heater, a washer, dryer, stove and a refrigerator. Replacing those items out of my pocket would cost me $2,050.

Furniture

I own one antique couch, one modern couch, one modern loveseat, a futon, a footstool, two dining room tables, one luxury, Greek revival, canopy bed, one dresser and one coffee table. Replacing those items would cost me $6,450.

Jewelry

I don't own a lot of jewelry, but what I do own is in perfect condition, constructed of precious metals and stones and antique. The pieces would be very hard to replace. I estimate my small jewelry collection to be worth $2,000.

Collections

I own a small coin and bill collection worth $150.

Home Office

Home offices are insured separately on homeowners insurance policies. My homeowner's policy automatically insures my office and my electronic equipment for $1,000.

Shed

Outbuildings are also insured separately on my homeowner's insurance policy, and I have one large shed. My shed is insured for $1,000.

Clothing

To replace my entire wardrobe and collection of shoes, I would need a minimum of $5,000. That's to replace all of my everyday clothes, my dress clothes and my professional clothes.

Flood Insurance

Regular homeowners insurance does not protect against flooding. To get flood insurance, I have to contact Flood Smart, the national flood insurance government agency and locate an insurance agent that carries flood insurance. Thankfully, I don't live in a flood zone.

My calculations tell me that I need $35,000 for my home and $16,100 for my personal property. The lowest amount of coverage I can get that would cover my personal property is $25,000, so my accurate estimate would be $35,000/$25,000. As a short term cost saving strategy, I currently insure my home for $5,000 and my personal property for $25,000, which saves me $600 a year on my homeowner's policy.

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