What to Expect When Using a Home Insurance Calculator

By Lucas Samuels

After purchasing a home, multiple carrying costs contribute to the financial difficulties that often accompany homeownership. There are the utilities, the cost of repairs, maintenance, and upkeep, and, of course, there’s that pesky mortgage as well. However, one of the more underrated costs of carrying a home is the amount you pay in home insurance premiums. 

Despite not being a legal requirement, home insurance procurement is a standard part of securing your mortgage. Lenders and financial institutions want to make sure that your (and their) investment is protected in the case of a large-scale emergency or other costly predicaments. Now that pretty much every one of these companies has an online presence explaining the broad strokes of their home insurance estimate process, third party companies are also developing tracking tools to help consumers make a more informed choice between vendors. 

In this article, we’ll help you understand more about the calculation process so you’ll be better equipped to determine the veracity and quality of home insurance quotes online. This not only helps you identify sub-par third-party service providers but also allows you to compare competing insurance providers accurately.

How to Estimate Home Insurance

Any discussion of home insurance estimates needs to begin with a candid discussion about the fluctuating nature of all the variables that go into the cost calculations. From demographic information about crime rates, weather-related damage, and fraud in your area to the actual quality of the structure itself. Below are some of the major factors that are used when calculating home insurance quotes online, which, depending on your situation, can either increase or decrease your home insurance premiums.

Factors that Increase Your Home Insurance Estimate and Premiums

These days it can seem like increasing home insurance premiums are inevitable and, thanks to the pandemic and its knock-on effects, they are in some ways. But this still doesn’t refute the point that your financial behavior, policy choices, and property-related variables can all cause your premiums to skyrocket when left unchecked. Here are a few of the factors that may cause your insurance estimates and policy costs to increase: 

Replacement Cost Value — Longtime property owners know that the longer you stay in your home, the more belongings you accumulate. This may be good from a nostalgic perspective, but it also increases the total value of your replaceable content. Many insurance companies have policy limits on how much they will reimburse you for personal belongings. So, unless you want to pay out of pocket for their replacement, you may want to increase your coverage.

Location — It’s always a good idea to investigate a neighbourhood before you plan on purchasing a house. In addition to learning about the local community, this can also inform you what insurance premiums may be like—the more claims filed in your area, the more expensive the home insurance policy.

Claims History — Just like the history of claims in your area influences policy-associated costs, your personal history as the insured can also impact premiums. If you habitually file claims for smaller items or non-essential repairs, you can be sure that your premiums will eventually correct to match the behaviour. 

Policy Add-Ons — Not all policies are comprehensive enough for your needs. Most are created to cover average expenditures and your specific situation may necessitate the purchase of additional coverage for your home and personal items, resulting in an increase in your home insurance estimates and premiums.

Factors that Decrease Your Home Insurance Estimate and Premiums

If you are looking for ways to get affordable home insurance or simply want to knock a little off the price tag, there are definitive steps you can take to help. From structural improvements to increasing upfront spending to simply behavioral modifications, here are some of the actions you can take to avoid steep home insurance estimates and premiums.

Increasing Your Deductible — Increasing your deductible means that you won’t be compensated as much by insurance companies if you file a claim. However, if you are confident that your home quality and lifestyle lend to low risk, this increase will also mean you pay less on premiums. 

Conducting Preventative Maintenance Around Your Home — Ensuring the integrity of your property is a great way to reduce insurance premiums. Insurers benefit most when covering clients with a low-risk property, and these savings pass down to you in the form of a lower premium. 

Being a Responsible Insurance Customer — Generally, this means you don’t try and claim every little incident or issue covered by your insurance and you always make your premium payments on time. This is another form of behaviour that insurers deem as low-risk, meaning you are rewarded with lower recurring costs for your efforts. 

Using an Online Home Insurance Calculator

All of the factors mentioned above are relevant to the generation of accurate home insurance estimates. Insurers and third-party companies factor this information into their cost equations to generate their policy quotes and projections. While the former provides highly accurate quotes (seeing as they actually offer the coverage), the latter tend to vary in their accuracy, with some being close to the mark and others not so much. 

How Accurate are Third-Party Home Insurance Quotes Online?

Because each home insurance estimate and quote generator is created and run by a different company, the lack of standardization causes problems in assessing accuracy. When in doubt, you can always try out multiple tools to create your own averaged answer, or you can just contact providers directly for an actual quote. Brokers are also a great ally in these scenarios as they take over the onus of investigating home insurance quotes online.