Buying a new home is one of the major decisions of life and involves a lifetime investment. So, it is important to protect it through homeowner insurance policy, which not only provides safety to house, but also to your belongings kept in the home, in the event of natural calamities. One can best define a homeowner policy as a single package that covers up fire, storms, theft and liability.

When comparing house insurance, one needs to understand that he actually insures two things, personal assets and home structure. When it comes to the insurance of structure of home, it may cover up guaranteed replacement costs, actual cash amount and replacement costs. Under replacement cost, the insurance firm gives payments to insurer for restoring damaged assets, without subtracting for the depreciation, but limits the maximum amount.  On the other hand guaranteed replacement cost involves paying out total costs of changing damaged assets, without any dollar limit and deduction for depreciation. It also gives safety for certain things like abrupt increasing of construction cost due to dearth of building material. As far as actual cash amount is concerned, it offers insurer an amount equal to replacement expenses of damaged assets, while deducting for depreciation.

For old home, one should purchase a homeowner insurance plan for the total amount needed to reconstruct the building. The approximate estimation of the money required to reconstruct the home can be obtained by multiplying local building value per square feet by square foot of home. As far as local building rates are considered, one can consult a reputed local builder. Other factors that will help determine the value of reconstructing home may include style, type of roof, exterior trim, attached garage, number of rooms and fireplaces.

When it comes to buying insurance for the protection of personal property, one should always check restrictions on several items like jewelry, electronic equipments, silverware and furs. Flooding is not included in standard insurance policy, so if you wish to cover it, you can ask local mortgage companies, neighbors or an insurance professional to know whether the area is prone to such natural disasters or not.  If it is, you should opt for a scheme that covers personal assets as well as home structure.

No matter, whether you wish to purchase homeowner insurance plan for your new home or older one, it is in your best interest to get familiar with all associated terms and conditions, or consult a reliable insurance firm.