Homeowners insurance should allow you to rebuild and refurnish your home after a catastrophe and help cover the costs of lawsuits if someone is injured on your property. Coverage of at least 80% of your home's replacement value, minus the value of land and foundation, is necessary for you to be covered for the cost of repairs.

There are several grades of policies, ranging from HO-1 to HO-8, with increasingly comprehensive coverage and cost. Unless you increase coverage, most homeowners policies cover the contents of the house for 50% to 75% of the amount for which the house is insured. The liability coverage in many homeowners policies is $300,000. This figure will vary depending on your individual situation and requirements.

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