A home insurance calculator can help you through some intense calculations when it comes to figuring out your home’s worth.
You’ve just moved into a new house. After a few long days of unpacking and interior design, you’ve realised just how much stuff you own. Chances are, the majority of your possessions wouldn’t be cheap to replace if you were to lose any of them. This is where home insurance becomes valuable. The only downside is that you are going to have to do all the calculations yourself.
Don’t sweat it, Monzi is here to shed some light on home insurance and how using a home insurance calculator can benefit you.
Please note, specific ideas and products presented in this article may not be on offer by Monzi nor the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.
What is home insurance?
You see it on the news far too frequently, house fires, floods, theft. As good as your security system might be, you can never guarantee that something bad won’t happen. That’s why so many people take out home insurance policies. To make sure they can replace what they lose, should the worst happen.
More broadly, home insurance fits into three categories. These being contents insurance, building insurance and combined home and contents insurance. Depending on whether you are an owner-occupier, a tenant or a landlord, you will most likely have different insurance needs.
This isn’t a bad thing. Choosing the right insurance policy for you is the best thing you can do to be protected and potentially save money. Before choosing your policy, it may be best to use a home insurance calculator and work out your asset value.
Why does it need calculating?
You know what’s in your house, therefore, calculating the value of your possessions is up to you. While you don’t have to add every thing you own to the insurance list, you should consider your choice extensively. For example, your clothes may not necessarily be cheap individually, but having to restock your closet fully will be expensive. Try to insure not only the costly things but also the things that would quickly add up if you paid in cash.
When it comes to the value of your home as a structure, you can get an online estimate. Or, you can get an updated valuation conducted for you. Ensure that you accurately calculate the cost to rebuild your house, however, not the total price of the land and the home as-is.
Using an online home insurance calculator
If you want to generate a quick average about what your potential insurance value should be, you have the option of an online home insurance calculator. You can find all sorts of calculators online that may be able to meet your needs. Whether that be a home building insurance calculator, home contents insurance calculator or maybe even a construction loan calculator, these tools serve to help you complete the task.
Typically these calculators will ask you to enter your address, to begin. From there, you can enter information to do with the occupants, the number of bedrooms, the property type and the number of goods. Keep in mind that this is not exact and you may need to do your calculations beyond this to reach a more accurate estimate.
The best way to simplify your calculations is to go from room to room. Doing so means that you get to view and engage with all your belongings, rather than just guessing. Locate any receipts that you may have to make your repurchase values more precise.
What is a reasonable premium for you?
It’s hard to give an accurate depiction of what the ideal premium may look like. Your premium calculates on the sum you choose to insure with, along with other factors. These potential factors include your circumstances and the area you live in. Along with any optional covers that you have chosen, the age of the eldest resident and your chosen excess.
Whether or not this is a reasonable premium depends on your budget and what features you need to be secure. Firstly, fonsider your location. For instance, have there been any recent break-ins? Moreover, how did your home hold up in storm season? Can you afford to pay more excess? Your answers to these questions may influence the right premium for you.
A reasonable premium isn’t always a selling factor
Having mentioned that various features might control how much your insurance costs. If you can afford to pay more, it may be smarter to prioritise the elements of your home insurance, over the cost of the premium.
If you are able, you should also consider the maximum claim limits, whether your area is considered disaster-prone and what is not covered by the policy. It may be worth clarifying if your policy is ‘new for old’, along with whether it is total replacement or sum-insured. Accepting the lowest premium you can find may end up being detrimental should you ever have to make a claim.
What kind of home insurance do you need?
As mentioned, home insurance falls into three different categories. Your circumstances should influence which kind of home insurance you choose.
Often the cheapest available option when it comes to home insurance, contents insurance will only cover what is inside your home. The objects most worthy of contents insurance include white goods, your electronics, jewellery and any office equipment. However, contents insurance can also be useful for furniture such as beds and couches.
Building insurance covers the structures on your property. Whether your house is the sole structure, or you also have a pool house outside, building insurance should cover it all. This means that if a cyclone came through and demolished your property, building insurance may cover your rebuild.
Home and contents insurance
A combination of both options, mostly used by owner-occupiers, home and contents insurance covers the lot. As a result, you can rest easy. Combining the two insurances can also potentially be beneficial cost-wise.
Home insurance as a landlord
If you are a landlord, you most likely won’t own any of the contents inside the home. Landlords typically only opt to take building insurance. The circumstances may be different for people who own Airbnb’s, however, as they are not owner-occupiers, the home and its contents are still all theirs.
Landlords can still use an online home insurance calculator. However, they may not need to account for any contents.
Contents insurance as a tenant
So, while landlords require building insurance, tenants typically only need contents insurance. This can be vital, as even though they do not own the house, this does not mean they are exempt from theft, accidental damage or natural disasters.
When tenants use a home insurance calculator, they may not need to enter any information about the structure itself.
How much should you insure your home for?
How much you insure your home for is dependent on the results of your home insurance calculator and your estimates. You mustn’t cut corners in this process and leave things off the list. If you underinsure your home and contents, it may come back to bite you.
If you were to lose your home completely, and are underinsured, your pocket may need to pay for the rest of the refurbishing. This may then mean you could potentially struggle to meet deadlines to pay your bills.
Hopefully, you don’t. However, if you encounter a situation like this, you may consider instant cash loans as a valid option. Monzi may be able to match you to a lender offering fast cash that could help you finish refurbishing.
Smart ways to lower your premium
Everyone has a plethora of bills they would rather not add to. However, trying to shave money off of your insurance is risky. To safely lower your premium, consider installing extra security measures. Locks, screens and cameras are all good ideas as they will both, help lower your premium, and increase your safety at home.
Another possibility is to ask a family member to stay at your home when you’re not there. This can potentially stop your property from being classed as unoccupied should something happen. However, run this by your provider first, as this may mean whoever stays at your home needs to be classed as an occupant.
How do you get a home insurance quote?
If you require more than just a home insurance calculator, you may be able to get a quote. Visit the website of the provider you are interested in, to do this. Most providers will have an online quote option. However, if you think you need more information, don’t hesitate to contact the provider.
If you are struggling to grasp what your next step should be or are having problems calculating the possible value of your insurance, it may be a good idea to speak to a financial advisor. This is a better decision than trying to find your way and potentially agreeing to a policy that does not benefit you. They may be able to guide your towards finding the best home insurance.
When might you need to claim your home insurance?
There are all sorts of reasons you may require an insurance claim. Theft and natural disasters are the primary sources of insurance claims. Regardless of what caused the need for a potential claim, there are a few things to keep in mind before you file.
Firstly, ensure the damaged item is under your policy. It will be very frustrating if you go through the motions of making a claim only to find out that that item is not insured. There are some things, such as collections, that you can insure through a separate policy. So, ensure you are chasing up the right claim first.
Secondly, work out if the damage will cost more or less than the excess? See below for further information about how excesses work. However, if the cost to replace the item is less than your stated excess, you will not be able to receive a payout. In this case, you should consider looking at paying for the damage out of pocket.
Paying an excess
The excess on your home insurance is the amount you pay to your provider, meaning they cover the rest. For example, if you set your excess to be $500, and the damage is worth $1,000, then your insurance provider will pay $500. This is a reasonable approach, unless your damage is worth less than the excess. In that case, you might as well not go through your insurance company.
You can choose to increase or decrease the amount of excess you pay if you wish. If you have a combined policy, you may have the option to reduce the excess on your contents and increase it on your home. This is often done by people who believe they are more likely to use one cover over the other.
Optional and additional cover
A majority of income providers offer optional and additional coverages. These are coverages that are not automatically in your policy. Therefore, you can add them for an increased premium. While you may not like the idea of having to pay more, many of these options may be very useful. The following is a summary of some of the options that might be available to you.
If you own any appliances that require a motor to run, this may be an excellent optional cover for you. This coverage will help to ensure that you can get your motor fixed quickly and have that appliance back up and running. Typically, however, this appliance has to be less than a required age.
If you have tenants or children who like to play cricket inside the house, this is the extra for you. Available to both parts of home insurance, this cover will pay for accidentally broken windows or broken possessions.
If you’re a pet owner, you’ll probably be wanting the best for your fur baby. Pet cover will give you approximately $2,000 to cover any potential vet bills you may have to pay. However, individual pet insurance may be more appropriate.
Portable values are useful if you are insuring an object you frequently take out of the home. For example, your jewellery or even your mobile phone. Again, though, these objects have individual insurance policies that may be better suited.
Total replacement or sum-insured
When choosing your cover, you may have the option of total replacement or sum-insured policies. Sum-insured means that you nominate how much you would like to receive. This is what you use a home insurance calculator for, to calculate for a sum-insured policy.
Sum-insured policies are far more common. Total replacement policies only apply to building cover. However, a total replacement will rebuild or repair as required and pay the full price. There is also a third policy that is growing in popularity. This is a safety net policy which will pay up to 30% above your sum-insured amount if it is required.
New for old
New for old is a policy type that benefits you if your contents are stolen, damaged or lost. With this, your insurer will replace these objects with brand new items of equivalent value.
The good part of this is that if you just bought a new laptop and somebody stole it two days later, you could get a new laptop as a replacement. However, if you had an old desktop computer that got stolen (if that’s plausible), you won’t get the latest model as a replacement. If your insurance provider cannot buy the same model new, then they will get you the closest equivalent.
Check the small print when seeking this policy as each provider may approach new for old slightly differently.
Storm, fire and flood insurance
If your area is particularly disaster-prone (e.g. hail storms) and you’re looking for some extra cover, this may be a good option for you. Home and contents insurance only looks after your home and everything in it. But what about the rest of your property?
There are multiple reasons this might be a good option on top of your home insurance. For example, home insurance often excludes intentional fires and bushfires occurring less than 72 hours after receiving a claim. When it comes to flooding, home insurance excludes actions of the sea and damage to fences by floodwater.
Nobody will force you to take this extra insurance. However, if you recognise you live in a vulnerable location, it may be best the take a policy like this.
Additional influences on the price of your insurance
There are additional factors that could influence your home insurance. It is vital to realise this as they might affect your premium.
Fireplaces, dogs, the age of your home, fire station proximity and proximity to a body of water (including swimming pools) are essential safety features. Each of these can impact your policy in either a positive or a negative way. Roof condition, remodelling, security cameras, home age, marital status, and home-based businesses can also help or hinder you.
Your provider will also look at some personal information. For instance, your claims and credit history, liability limits, insurance scores and the age of the occupants may be considered. While not all will apply or impact you, keep this list in mind.
What won’t home insurance cover?
When you use a home insurance calculator, you should keep in mind that not everything you own will qualify. This does not mean that you can’t cover these objects at all, it just means that they may not be eligible for the home and contents insurance.
Home and contents insurance is quite particular. For example, your outdoor entertaining set-up most likely won’t count. You can insure a lot of things under home insurance. However, it may be for less than you could get if you insured on its policy. This extends to collections, phones, and art. While your provider most likely won’t prevent you from insuring these things under contents, it could be more beneficial to insure separately.
And just in case it has to be said. You cannot insure anything illegal.
Holiday home insurance
If you own a holiday home that can potentially be left unoccupied for long periods, then this insurance may be for you. Much like a standard home and contents insurance policy, holiday home insurance covers you similarly. However, there are a few optional coverages that may be appealing.
These include cover for paying guests, for overseas homes or for homes left empty for over 30 days. They may even cover temporary loss of accommodation and public liability for paying guests.
Holiday home insurance can be more beneficial over lenders insurance as it allows you to cover the contents and the structure.
Unoccupied property insurance
Building on holiday home insurance, if you need to leave your home for a while, you may be interested in unoccupied property insurance. There are plenty of excellent reasons your property may be unoccupied. Whether you’ve inherited it, renovating, you’re going on holiday, or it is left on the market while you move to a new home.
Not all insurance policies are the same, so if you are considering this, talk to your provider. However, If you are looking for some peace of mind while you are away, this could be the solution. Typically a policy like this will protect against theft, flood, vandalism, fire, storms and impact damage.
Compare policies online
Just as you can use a home insurance calculator, you can also use an online comparison tool to weigh-up your options. It may be better to do this after working out how much you want to insure for. Then you can go hunting for the best optional cover.
When doing so, consider whether you would like sum-insured or a total replacement policy. From there, decide whether ‘new for old’ would benefit you. There are many sites that you can use to compare policies. However, if you think you have narrowed your choice down to a couple of key providers, then it may be a good idea to visit their sites directly.
It can be overwhelming trying to decide on a provider for your home insurance. So, if you’re looking for some free advice, start by investigating MoneySmart’s guide to home insurance.
Reviewing your home insurance
You should get notified annually when your insurance is about to expire. This is always a good time to review your policy and consider what changes have happened in your life. This is because you may need to update your policy to suit whatever has transpired.
One of the reasons that you may want to review your policy is that you are unhappy with a feature, or have found a better deal elsewhere. This is perfectly understandable. Regardless of the reasoning, if you have done your research and believe this is a better deal, then it may be a good move.
The next reason you may need to review your policy is if your details have changed. For example, if you have changed address, or relationship status (defacto to married), then your policy is open to fluctuate. For the sake of transparency, you should get in contact with your insurance provider.
Renovations and home improvements is also a good reason to review your policy, especially if you are sum-insured. If you are significantly upgrading your home, it could boost its value. This may then have a chain effect and raise your premium.
Can Monzi help?
Unfortunately, Monzi cannot help you with anything insurance related as that is not what we offer. We instead may be able to help you obtain a personal loan from $300 to $10,000. This can be useful if you find you need a bit of extra cash to finish a refurbishment.
We might also be able to help cover the damages of an item worth less than your excess as an alternative. As we are 100% online, you can apply wherever you are at whatever time, and we will do our best to match you to a lender who may be able to help.
All you need to do is fill out our application and, if you apply during business hours, we may be able to match you within an hour. While we can’t help on the insurance front, we are ready and willing to do our best to match you to a lender who may offer the quick cash you need.
Let’s keep in touch
Alternatively, if you’re looking to apply, but you have some unanswered questions, send us an email. For any queries, you can reach our friendly team at firstname.lastname@example.org.
And before you go, why not check out our next article on negative interest rates?