Your Home Value
The typical consumer purchases his/her homeowners insurance policy when taking out a mortgage to buy a home. During this process, determining your home value is quite simple because your mortgage lender will normally mandate the purchase of a minimum amount of coverage, or the amount of your home loan. In other cases, calculating a home value estimate is far more complex. For instance, if you already have a mortgage or if you own your house, you might wonder "how do I figure out the value of my house before buying coverage?" The following information will help you ascertain an accurate estimate.
Confer with Your Insurer
Because estimates involve a number of complicated variables, most insurers handle the estimations for their policyholders. That way, you don't have to wonder "where do I find my home value?" When you apply for a policy, your insurer will compute an estimated house value based on your home's age, construction materials, location, square footage, and other factors. They will then issue a policy to insure the value of your dwelling. If you disagree with the insurer's estimate of your home's worth, you can always have your dwelling independently appraised or try a different insurer.
Using Figures with Caution
In determining home value, consumers often make the mistake of insuring their dwellings for their full worth. Doing so will result in unnecessarily inflated premiums. Instead, to determine worth, figure out how much it would cost to rebuild your home from the ground up. That is the amount of coverage you want to purchase, not the real estate value of the property. Remember on the real estate market, your home worth includes things like appreciation and the value of your land, neither of which pertain to a home insurance policy. All you need in your estimate is the replacement cost of your home itself without land worth or appreciation factored in. If your home suffers a total loss, you will not have to pay to replace the land or appreciation in value, which is why you don't need to account for these factors in setting your coverage levels.
Including Personal Property in Your Coverage
When you estimate worth, keep in mind that you will also need to insure the contents of your home. This figure is usually separate from the amount of coverage you purchase for the actual structure of your home. The amount of personal property protection you carry is entirely up to you—your insurer will not provide an estimate on the contents of your home.
As you think "what is the value of my home," try performing an inventory of everything you store in your house. Make a list and come up with a rough estimate of your belongings' worth. You can then purchase replacement cost protection for the full value of your possessions. Don't forget to keep documentation of these estimates in the event you need to make a claim. Store your inventory, receipts, photos, and so forth in a safe place, such as a safe-deposit box, a fireproof safe, or a friend or relative's home.