This might be the toughest question I have to answer when it comes to insuring a home. Why? Because the reality is that at the time you start a policy, unless you just built the home, you really have no definite way of knowing this number. So here is my take; When in doubt always make sure you feel comfortable. Here are some things to do;
1. As an agent I use any public data I can get my hands on. This is combined with what you tell me then I input it into the company provided home replacement cost estimator. Out comes your homes replacement cost and per company policy you have to have this as your minimum level of coverage.
2. Some people do a quick calculation, this guy included, so you take $150 and multiply it by the home’s square footage and you have a value. Some people use $200, me as well, depending on the type of home and where it is.
3. Here is a resource I played around with while thinking about this topic; www.accucoverage.com . Easy to use but like all estimators it is limited.
4. Here is a free one; www.building-cost.net
5. And another paid one; http://www.hmfacts.com/homeowners/
6. You could find a home builder and get them to give an estimate
7. You can research Modular Construction homes that look like yours
8. You can find a newly constructed home near yours and see what it is selling for. Keep in mind that if it is brand new somebody is trying to profit on it so the sales price could be a solid number to compare with yours.
Now I have done options 1-5 as well as 7 and 8 and can say, at least for my home, all seven figures were different. BUT they were all pretty close, so now what? My home is covered to the standards of the company I insure it with. It is also at a figure that I feel more than comfortable with. Could I get less coverage? Yes, but then you need to do the math. I can probably lower my coverage from $300,000 to $250,000 and might technically still have plenty of money to build my home. But I am not comfortable there and I think it is silly to save maybe $50 and lose $50,000 in coverage.
Should you do this every year? Well yes, to some extent you need to check in on your coverage every year. As bad as it would be to be under-insured it is still pretty bad to be paying for more insurance than you need.
Now what, well I could use some help. See I did all of these steps but would love for you to do them and let me know what you find. E-mail me here firstname.lastname@example.org so we can discuss. Also, as long as you would share the final reports I would be happy to pay for the estimators in steps 3 and 5.
As always, just some suggestions you may want to try.