When shopping for home insurance, you will generally be asked to provide an estimate of the value of your home and its contents. This is so the insurance company can calculate the cost of your monthly premiums based on the value of your overall insurance policy. While this may sound like a simple task, there are many additional factors to consider. To help ensure that your home and assets are adequately insured, here are a few tips to help you when calculating the value of your personal property.

Make an Inventory List

Most people aren’t really aware of all they own. Regardless of whether you are a tenant in an apartment building or a private home owner, making an inventory list is the first step to ensuring you are adequately covered. Draw up a spreadsheet and have a section for each room. Make several columns with headings such as: Item, Description, Acquisition cost, and Replacement cost.  Start in your bedroom and list every single item. For example, “Item: Necklace; Description: 20 cm long thin gold chain with flower pendant; Acquisition cost: none – received as a gift; Replacement cost: $200.” Then move onto furniture, clothing, linen and ornaments. Most often, you will not be able to remember what you paid for a particular item or you may have simply inherited some items of furniture. You may also not be aware of what its current value is. Don’t be overly concerned about that at this stage. The important thing is to draw up a list. In this way, you can make sure that you account for all the items in your home. It is often difficult to record items after they have gone missing or been destroyed. It is much easier to make a record when you can still see all the items in your home.

Your Household Contents Are Not as Valuable as You Think

While many of the items in your home may have a sentimental value, they unfortunately may not have much real value. Think of when a neighbor has a garage sale. What sort of value would you expect to pay for used or old furniture and furnishings? In the same way, your bedside table that you inherited from your grandma may not be that valuable. The exception to this is antique items,; however, it is important to remember that just because an item is old does not mean it is a precious antique. An antique’s value is based on its design, rarity and era. If you think a piece of furniture could be an antique, find out as much as you can about it and then research it. You can also ask for an appraisal by an antique dealer, although these are seldom accurate.
Establish a Replacement Value for Your Home and Its Contents

Rather than the sale or purchase value of your assets, insurance is more interested in what it will cost to replace your valuables should they be lost, destroyed or stolen. For example, if you have a newly built home with a mortgage to pay off, your insurance value of your home should be enough to cover the cost of rebuilding plus interest due on the mortgage. It is also important to update your insurance in terms of current values. What it cost to build your home 10 years ago is not going to be the same value as what it will cost to rebuild the same home today or tomorrow. Because of inflation, building and maintenance costs escalate each year. While it is unlikely that you will ever receive the full replacement cost of your home, you can make every effort to make as accurate an estimate as possible when insuring your home.

One way to get a good indication of the market value of your home is to ask a real estate agent for an appraisal of your property. They will consider things such as location, age, construction methods, security and finishes. Some agents will charge a small fee to do the appraisal for you but it can be worth it to get a current market value of your property. Once you have that you can then add to it your inventory list of your household items to get the total insurance value of your home. Some insurance firms use formulas to estimate the true value of your home but these differ from company to company. When asking for quotes, it should be possible to establish what formula a company uses. This will then give you additional insight on how they value your home.

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Owning a home can mean different things to different people. Some people value their home as their most prized possession, while others consider it merely a place to rest their head at night. The difference in sentiment toward the home can be a reflection of what type of home insurance policy a homeowner opts to buy. In the insurance market today, there are home insurance policies available for all types of people.

If you want the cheapest policy possible…

Many homeowners don’t want to spend money on insurance. They would rather take the risk of under insuring the home than pay a high insurance premium every year. If you prefer to self-insure for most perils, then you should purchase either a HO1, HO8, or a basic HOA home insurance policy. All three of these insurance policies are very minimal coverage. They will only protect the home from ten perils. The two most important perils covered with these policies are fire and wind. Any coverage for water, falling objects, and other perils are not included in these policies.

If you want good protection at a good price…

Most homeowners fall into a “middle of the road” category, where they want adequate coverage, but do not want to spend an arm and a leg on insurance. If you fall into this category, you should purchase either a HO2, HO3, or HOB home insurance policy. The HO2 is more coverage than the policies listed above, but less coverage than the HO3 and HOB, and thus should be slightly less expensive. All three policies, however, are solid policies. The HO2 lists perils your home insurance covers, while the HO3 and HOB cover everything with the exception of a few exclusions. All of these policies do include coverage for falling objects and include at the least basic water coverage like Sudden & Accidental Water Damage.

If you want the best possible home protection…

There are many homeowners who want the absolute best protection for the home no matter the cost. There are two policies designed specifically for people who want to make sure that they have the most adequate protection the market offers. Those policies are the HO5 and the HOC home insurance policies. These two policies go above and beyond any coverage that lesser policies have. They will cover both your home and property for open perils, and the exclusion list for perils not covered is small.

Are you interested in learning more about each type of home insurance policy available? Insurance Education Group is a company aimed at helping people make the right home insurance decisions the first time, so when disaster strikes you will be ready. Insurance Education Group also offers a way for you to field multiple quotes from multiple companies in a matter of a few minutes! Just enter your zip code in the box on IEG’s main page to start, and you’ll be connected to agents ready and willing to help you save. So whether you are searching for New York, Los Angeles, or Houston home insurance, we’ve got you covered!