Homeowners insurance policies offer a variety of coverage levels. The most basic policies cover only your dwelling, which is the most basic structure of your home. More comprehensive policies also cover other structures on your property and your personal belongings. You can also add coverage for personal liability, as well as coverage for medical costs incurred by people who are injured on your property.
When determining the policy you will purchase, you must also choose how much coverage you need for each part of the policy. For example, if you are insuring your dwelling, you can choose to cover either the replacement cost or the fair market value. While fair market value coverage is cheaper, covering the replacement cost will ensure that you can completely rebuild your home if it is destroyed. Likewise, you must choose maximum reimbursement amounts for the other aspects of the policy, such as coverage for your personal belongings. Finally, you must choose a deductible, which is the amount you must pay out of pocket before the policy will begin to reimburse you.