If you are looking for a homeowners insurance calculator, there are some questions you need to answer before plugging in the numbers.

First things first. How much would it cost you to replace your home, your outbuildings and fences, and all of your personal property if they were destroyed by a disaster such as a fire or tornado? You need at least that amount of homeowners insurance. Two thirds of Americans are underinsured by an average of 18 percent. That means that if they had $500,000 worth of damage, they would only recoup $410,000 from their insurance company leaving them to hold the bag for $90,000 in rebuilding their life.

You also need to figure out how much it would cost to replace the contents of your home if a burglar were to steal everything. Even if the home itself isn’t destroyed, you also need property insurance.

There are two types of possessions insurance – replacement value and actual cash value. The actual cash value policies are quite a bit cheaper but may not satisfy you if anything happened. Here’s how it works. Say you bought a couch for $900 two years ago. The actual cash value policy would assume that you should get an equivalent two year old couch from Craigslist. The replacement policy would get you a brand new $900 couch.

How much money could you come up with from your savings and other sources if a tragedy were to occur? That is the amount you can have in a deductible. Most policy’s deductibles come in a range between $500 and $5000 with the higher the deductible the lower your insurance premiums. This is a key piece of information you’ll need to use a homeowners insurance calculator.

The last piece of information you’ll need is to determine what riders are necessary. For instance, floods are not covered under typical homeowners insurance policies. So, you will either need a rider from your own company or separate insurance from the National Flood Insurance Program. If you live in a state with significant natural hazards that aren’t covered (hurricanes in Florida, earthquakes in California), you’ll need a rider to protect yourself there.

That’s what you need to decide before you use a homeowners insurance calculator.

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