Louisiana home insurance coverage calculator

Rebuild cost, not market value

The single most consequential idea on this page is that a home insurance limit should be the cost to rebuild the structure, not the price the property would sell for.

Land does not burn. A lot in an expensive neighbourhood carries much of the market value and none of the rebuilding cost, so a house worth far more than it costs to build needs less cover than its price. The reverse also happens, and it is the more dangerous case: in a market where prices are low relative to construction costs, a house that would sell for $220,000 can easily cost $300,000 to rebuild, and a policy written at the sale price would leave the owner to find the difference.

That is why this calculator asks for square footage and a local rebuild cost per square foot rather than for the value of the home. The hint on that field is the important one: this is not the price per square foot that homes sell for. Ask a local builder, or ask your agent to run a replacement cost estimator.

The worked example, at the default inputs

The calculator opens on 2,000 square feet, a rebuild cost of $180 a square foot, contents at 50% of the dwelling figure, $15,000 of detached structures and a $240,000 mortgage.

• Dwelling: 2,000 multiplied by $180 is $360,000.
• Contents: 50% of $360,000 is $180,000.
• Detached structures: $15,000.
• Loss of use: 20% of $360,000 is $72,000.
• Total insured value: $627,000.

The mortgage does not enter the sum. It is there so the tool can warn you when the loan exceeds the rebuild cost, which at these inputs it does not: $240,000 against $360,000 of dwelling cover.

Choose a state and the tool adds one more line, which is not insurance at all. In Texas, at the published 1.71% effective property tax rate, the annual property tax on this dwelling figure is about $6,156. It is shown for budgeting, separately labelled, because the two costs land in the same escrow account and people plan for one and not the other. Effective rates by state are on our state pages, and the escrow mechanics are in the mortgage tools.

A second example: the rebuild cost moves

The rebuild cost per square foot is the input that has moved most in recent years, and it is the one people are most likely to leave stale.

Change $180 to $250, which is not an extreme figure in an expensive labour market, and everything moves at once: dwelling $500,000, contents $250,000, loss of use $100,000, total insured value $865,000. A $70 change in one field is worth $238,000 of total insured value, because three of the four components are derived from it.

Now go the other way. Set the rebuild cost to $110 and the dwelling figure falls to $220,000, below the $240,000 mortgage. The tool adds a line saying the mortgage exceeds the rebuild cost by $20,000, and notes that a lender may require cover at the loan amount even so. That is a real situation, most common where land is cheap relative to construction, and the resolution is a conversation with the lender rather than a number this page can produce.

The contents percentage is the other adjustable convention. Drop it from 50% to 30% on the default inputs and contents fall from $180,000 to $108,000, taking total insured value to $555,000. Fifty per cent is the common industry default and it is a starting point, not a measurement.

Why does the mortgage sometimes exceed the rebuild cost?

Because a mortgage is written against the market value of land and structure together, and insurance is written against the structure alone.

Where land is a large share of the price, the two numbers diverge in the direction most people expect: the loan is bigger than the rebuild cost. Where land is cheap and construction is expensive, they diverge the other way and the rebuild cost is the bigger number.

Lenders generally require cover at least equal to the loan, or at replacement cost, depending on the loan documents. Where the loan is larger than the rebuild cost, insuring at the loan amount means paying premium on cover that cannot be claimed, since the insurer will only ever pay to rebuild what was there. The honest answer is to get the replacement cost estimate in writing and take it to the lender, not to quietly over-insure. Our mortgage guides cover what lenders can and cannot require on the insurance line.

Extended and guaranteed replacement cost

An extended replacement cost endorsement pays a stated percentage above the dwelling limit, commonly 25% or 50%. A guaranteed replacement cost endorsement pays the full cost to rebuild whatever that turns out to be, and is less widely offered.

The reason to care is timing. A dwelling limit is adequate right up until it is not, and the moment it fails is a widespread disaster: a wildfire or a hurricane destroys hundreds of homes at once, every contractor in the region is booked, materials are scarce and expensive, and rebuilding costs spike well above the estimate the limit was set from. That is precisely when a large number of policyholders discover the limit together.

An endorsement of this kind is the answer to that specific failure mode, and it is usually inexpensive relative to the base premium. It is worth asking what the endorsement costs and what percentage it adds, because the answer is often small.

What a standard policy will not pay for

Two exclusions matter more than all the others combined.

Flood is not covered. No standard homeowners policy in the United States covers flood damage. Cover comes through the National Flood Insurance Program or a private flood policy, it is bought separately, and it typically carries a waiting period before it takes effect, so buying it as a storm approaches does not work. Flood is also not confined to coastal or mapped high-risk areas: a large share of claims come from outside them.

Earthquake is usually excluded and is likewise a separate policy or endorsement, with its own deductible, which is often a percentage of the dwelling limit rather than a flat sum.

Beyond those, standard policies exclude ordinary wear, maintenance failures, and damage from long-term seepage rather than a sudden event. Sewer and drain backup is commonly an endorsement rather than a base cover. High-value items such as jewellery, instruments, tools and collections are subject to per-category sublimits and need scheduling individually if they matter.

Common mistakes with coverage limits

• Insuring at the purchase price or the Zestimate. The market value includes land. The insurer will not rebuild the land.
• Using a stale rebuild cost. A figure from a policy written several years ago will understate current construction costs in most markets. Ask for a fresh estimate at renewal, not once a decade.
• Leaving contents at the default and never checking. Fifty per cent of dwelling is a convention. Anyone with tools, instruments, jewellery, cameras or collections is above it and needs scheduled items besides.
• Assuming actual cash value is replacement cost. Actual cash value pays the depreciated value of a fifteen-year-old roof or a ten-year-old sofa. The gap at claim time is large and it is the policyholder who covers it.
• Believing flood is included because water was involved. A burst pipe is usually covered. Water that arrives from outside and rises is flood, and it is not.
• Forgetting the detached structures. A fence, a shed, a deck and a detached garage are a real number and the default $15,000 is a placeholder, not an estimate of yours.
• Ignoring inflation guard. Many policies increase the dwelling limit automatically each year. Check the percentage, because a limit that rises 2% a year in a market where construction costs rose faster is falling behind in real terms.

What should you check on the declarations page?

• Compare the dwelling limit against a current replacement cost estimate, not the sale price
• Confirm whether contents are settled at replacement cost or actual cash value
• Check the loss of use limit and how many months it will actually fund
• Ask whether an extended or guaranteed replacement cost endorsement is available and what it costs
• Check the wind, hail and named storm deductible, flat or percentage
• Confirm whether you hold separate flood cover, and when it took effect
• List and schedule anything above the per-category sublimits
• Check the inflation guard percentage against local construction cost movement

Keep a copy of the declarations page somewhere that is not inside the house. A photographic inventory of the contents, stored the same way, is the difference between a claim settled on your list and a claim settled on your memory.

What this calculator does not include

• Liability cover. The personal liability limit on a homeowners policy is a separate and important decision, and it is not modelled here at all.
• Flood and earthquake. Separate policies, as above. The insurance section goes through how each is bought.
• Any premium. This tool sizes cover. What that cover costs depends on the carrier, your claims history, the roof, the construction type and the location.
• County-level property tax. The tax line uses a state effective rate where we publish one, and leaves the line out entirely where we do not, rather than substituting a national average. That policy is described in our methodology.
• Ordinance and law cover. Rebuilding to current codes can cost materially more than rebuilding what stood there, particularly on older houses, and that gap is its own endorsement.
• The claim itself. Adequate limits do not guarantee a smooth settlement, and the documentation you hold before a loss does more for that than the limit does.

This page describes how coverage limits are conventionally built. It is not an insurance recommendation and not personalised advice. See the disclaimer.