Homeowners insurance covers your home’s physical structure, other buildings on your property (e.g., a detached garage or shed), and personal items for damages caused by natural disasters and protects you against accidents and injuries caused to visitors on your property.
Mortgage lenders require that you carry insurance for the length of your mortgage.
As a guide, make sure you have enough coverage for the two main categories in a homeowners policy: your home and your belongings. This should be in the form of replacement coverage; that is, what it costs to replace your home and belongings using current pricing and comparable materials.
You also will want to buy coverage in case you need to live elsewhere while repairs are done, and liability coverage in case others get injured on your property.
Most standard policies offer from $100,000 to $300,000 in liability insurance. You may want to consider an umbrella liability policy of up to $1 million or even $5 million and extra life insurance to make sure there will be enough money to pay off the mortgage.
A property and casualty insurance agent can assist you with these decisions.