If you plan to lead a conventional life, odds are you will need insurance. Youll need health insurance, car insurance, and eventually home insurance. The latter is often the most perplexing since we have no prior experience with it as we do with health insurance.

What exactly is home insurance and how bullet-proof is your coverage? For starters, home insurance, in theory, provides you with financial protection against disasters. These disasters can involve your home, the contents of your home, or any liabilities within your property that could lead to a lawsuitlike when your dog bites the pizza delivery guy.

However, home insurance doesnt mean your homes invincible. Unless youve purchased specialized insurance, it cant protect you against floods, nuclear war, earthquakes, or poor maintenance. Dont slack off with your homes upkeep”negligence does not go over well in insurance court.

The most common scenario with homeowners insurance, however, involves receiving some sort of compensation for damage to your property and its contents. For when the time comes, it is important to know how compensation is calculated. The insurance company will either pay for the repair, or you can get cash value. However, while you might have paid $500 for your grill, the insurance company will pay you back whatever the grill is currently worth, usually a lesser value.

Homeowners insurance is an expense you cant avoid. And while it might feel daunting at first, theres comfort in knowing that youre protected against most calamities.

Published with permission from RISMedia.