Full Replacement Coverage

At the very least, you should have full replacement or replacement cost coverage. This policy will cover the cost of replacing your home or other insured buildings. Pay attention to the limits of the policy because they will define what kind of further coverage you need. Earthquake and flood insurance are sold as separate policies and, although the premiums can be high, you should buy them if you live in an area that regularly suffers such disasters.

If you are new to the area, the local library archives will have environmental data that will help you look into what kinds of natural disasters have occurred in the area in the past. (Keep reading about this in Insurance Tips for Homeowners and 15 Insurance Policies You Don't Need.)

Keeping Current
Once you have your home covered with all the relevant policies, you will need to have your home reassessed every few years so that the policies reflect the true value of your house. Also, if you do major renovations, such as installing hardwood flooring or finishing the basement, you will need to update the policy. There is a more extensive home insurance policy available called a guaranteed replacement cost policy. This policy will rebuild your home, and may include improvements dictated by changes in the building code (something other policies may omit), but it is not available everywhere.