How do insurance companies estimate the amount of coverage for your home? -

That is, how do they estimate the amount of living area of your home (sq foot), the cost to repair, etc. We have a computer program put out by Marshall Swift/Boeckh. We put in the zip code, year built (yes that matters), # of families, length x width (outside measurements), # of stories, additions with size, foundation type (slab, crawl, basement, walkout, finished, etc), framing type (studs, post beam, steel, etc), ceiling height (8, 9 or 10 ft), general shape. Also, siding type, roof type (asphalt, metal, slate, etc - whether it is elaborate), any cathedral ceilings, attached structures like garages, porches, balconies decks (with size). As for the inside we put in quality of kitchen baths (basic, builders grade, semicustom, custom or designer), # of full, 3/4 half baths, flooring, wall coverings, ceilings, fireplaces, heat type (hot air, hot water, radiant, including fuel type), any hot tubs or jacuzzis, spiral staircases, elevators, chair lifts, built in bookshelves, special millwork, decorative beams. That is all I can think of off the top of my head. It is a pretty comprehensive program. We can also add in architect fees and contractor overhead. It is pretty accurate for most houses. When you start getting up towards $800,000 to $1,000,000 plus, it is still best to get a builder that specializes in custom homes to do real appraisal on the rebuilding cost. It may also estimate low if you have an old victorian with turrets, fancy siding gingerbread lots of custom woodwork inside. You would want a builders estimate in that case too. I hope this helps. They do a calculation of the cost to replace the home if there was a total loss, Square footage, construction costs to rebuild, age of home etc...Plus this must all be at least 80-90 percent of the cost to rebuild. They don't insure the living area - the space - they insure the building. There are three ways to get the measurements - from you, from them going out there and measuring, and from your county property tax website. Your agent can show you how they calculate it. Basically, they measure the outside of the house, multiply by number of floors, modify for extra bathrooms, fireplaces, built-ins, basements garages, etc; then use a location multiplier. Most areas, it should come out to between $150 and $250 per square foot, but older houses (read, custom woodwork, plaster instead of drywall, molding, etc) cost more to rebuild. Purchase price, market value, etc, have NOTHING to do with it. The insurance company doesn't buy your kitchen when you have a fire, they FIX it. an insurance company calculates the amount of coverage by finding out the actual value of your property and then finding out the amount of premium you should pay. this is done by actuaries who are employed mathematicans of the insurance company.how much you pay or will be paid in case of damage also depends on the sum you state as the value of your property. It usually starts with the purchase price (cost to build). Add in all additions and some appreciation value. Principally, the insurance is designed to cover the balance of the mortgage.