How to Calculate Hazard Insurance

by Stephen Hicks ; Updated July 27, 2017
The first thing you need for hazard insurance is reconstruction cost amount.

Hazard insurance and homeowners insurance typically mean the same thing, though in some cases they can be different. Homeowners insurance is a package deal and comes with several types of coverage, including property and liability, all in one policy. Basic hazard insurance may not have a liability component and may offer protection against fewer perils than most homeowners insurance. In either case, the basic process of calculating how much insurance you need and its cost is similar.

Step 1

Determine the amount of money it would take per square foot to build a home of similar construction to yours in your area. You may have to hire an appraiser or contractor to help you with this. Your insurance agent may have tools to calculate this figure also.

Step 2

Multiply the construction cost per square foot by the total number of square feet in your home. This gives you a minimum amount of dwelling coverage you should have on your hazard insurance.

Step 3

Calculate the size of your family's asset base including all real estate, vehicles, securities and other valuables you own. Your policy's liability coverage, if it has any, should be at least this amount.

Step 4

Call your insurance agent and ask for a hazard insurance quote using the dwelling and liability amounts you calculated. If you want to shop around, call several agents or brokers and do the same. If your hazard insurance does not include liability coverage, ask for a quote using only the dwelling amount.


  • If your family's asset base exceeds the maximum amount of liability coverage offered on the hazard insurance policy, consider a personal umbrella policy also. These policies add extra liability coverage in $1 million increments.


  • If your hazard insurance does not include liability coverage, it may also not include contents coverage for your belongings unless you ask for it specifically.

About the Author

Stephen Hicks has been writing professionally since 2000. He recently published his first novel, "The Seventh Day of Christmas." He spent three years as a licensed life and property/casualty insurance agent in California. Hicks holds a Bachelor of Fine Arts in cinema studies from New York University.

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