If you look hard, you may find a policy that guarantees payment of 100% of your repair or rebuilding costs, without any limits. This rare creature is called a "guaranteed replacement cost" policy. But if your house has historical features that are hard to reproduce, finding such a policy will be especially difficult.

Get 100% guaranteed replacement coverage. Ellie knew she'd used a good insurance agent-but until her home was destroyed in a fire, she didn't realize how lucky she'd been. Ellie says, "You can't tell by looking that the house is a total loss-its construction was partially brick, and it's still standing. But everything inside was either burnt or destroyed by smoke damage. With the 100% replacement cost coverage, we can tear down what's left and rebuild the whole thing just like it was." Ellie knew she'd used a good insurance agent-but until her home was destroyed in a fire, she didn't realize how lucky she'd been. Ellie says, "You can't tell by looking that the house is a total loss-its construction was partially brick, and it's still standing. But everything inside was either burnt or destroyed by smoke damage. With the 100% replacement cost coverage, we can tear down what's left and rebuild the whole thing just like it was."

To Be Avoided: Actual Cash Value Coverage

Don't buy an insurance policy that pays the "actual cash value" of your house. These are sometimes pushed on people with older houses or ones with an inadequate water supply (a fire danger). You'll get the house's replacement cost minus minus any depreciation or wear and tear that it's suffered since being built. any depreciation or wear and tear that it's suffered since being built.

Will Your Living Costs Be Covered While the House Is Rebuilt?

If your house needs major repairs or rebuilding, you probably don't want to pitch a tent outside. Standard policies include a "loss of use" provision to cover the extra costs of living elsewhere, like hotel bills and restaurant meals.

Most policies limit your living-costs coverage to one year. But two years is better, giving you time to find an architect or contractor (which can be tough after a major flood or wildfire), develop plans, and actually build.

Some policies instead place a dollar limit on your living expenses, often 20% of the total insurance on your house. If so, calculate average rental and utility costs in your area and figure out whether that will be enough.

Will Your Coverage Be Enough to Replace Personal Possessions?

You'll want to be able to replace the stuff inside your house if it's lost, stolen, or damaged. Look for a policy offering "replacement value," meaning the actual cost of buying a new piece of jewelry, television set, refrigerator, or whatever.

The alternative, "actual cash value," is far less satisfactory. You'd get the amount your stuff would sell for used, taking depreciation into account. It's not far different from estimating how much your things would sell for one eBay.

Regardless of how much you can claim for each individual item, a cap will be placed on the total amount you can receive, based on a percentage of the insurance on your house itself, usually 50%-70% of your maximum payout. So if you've got $375,000 in insurance on your house, you'd get $187,500 worth of coverage for its contents. If this sounds like more than enough, great.

If it doesn't, draw up a list of all your worldly goods-furniture, clothes, jewelry, toys, sports equipment, art, light fixtures, appliances, electronics, CDs and DVDs, garden equipment, and more-present it to the insurance company, and ask how much added coverage would cost. Even if you don't create this list now, do so after you move in, in case you ever need to make a claim.

CHECK IT OUT.

Free inventory software: It's available from the Insurance Information Institute, It's available from the Insurance Information Institute, www.iii.org (click "home," then "Know Your Stuff "). (click "home," then "Know Your Stuff ").

Got Expensive Items Needing Separate Coverage?

Talk to the insurance rep if you own any big-ticket items such as jewelry, furs, firearms, coins, or silver. In a standard policy, separate limits may apply to these if they're stolen, usually between $1,000 and $2,000 in total. You'll need to pay more for endorsements insuring each such item for its appraised value-but thefts are among your most likely losses. This coverage will also take care of "accidental disappearance," including dropping your emerald ring in the garden.

Protection for Other's Injuries: Liability Insurance

Liability insurance compensates you and people who visit your property for two things: * "Medical payments to others." "Medical payments to others." This pays the medical bills of people from outside your household who are accidentally injured while on your property or by you or a household member, including your pets, whether on your property or elsewhere. This pays the medical bills of people from outside your household who are accidentally injured while on your property or by you or a household member, including your pets, whether on your property or elsewhere.* "Personal liability." "Personal liability." This covers your legal fees and any damages the court orders you to pay, such as medical expenses and lost wages, if you get sued by someone who was injured or whose property was damaged by someone in your household (human or animal). It covers events not only within your house, but anywhere-if you land on a sheep while parachuting in Scotland, your debt to its owner is covered. This covers your legal fees and any damages the court orders you to pay, such as medical expenses and lost wages, if you get sued by someone who was injured or whose property was damaged by someone in your household (human or animal). It covers events not only within your house, but anywhere-if you land on a sheep while parachuting in Scotland, your debt to its owner is covered.

Your liability coverage has its limits, though. You'll need either additional coverage or a separate policy for injuries related to your car, home business, nanny or other domestic worker (in some states), tenants (if any), and some pets (depending on their breed, behavior, or other circumstances).

TIP.

Agreed to rent your house back to its former owners? You'll need separate liability insurance to cover your tenants for this time period; talk to your insurance company. You'll need separate liability insurance to cover your tenants for this time period; talk to your insurance company.

Pet Liability Issues

Although dog bites and other pet-related injuries are ordinarily covered, the costs have been going up, and the insurance industry is getting stricter about this. If you've got a Rottweiler, Doberman, German Shepherd, Chow Chow, Pitbull, Husky, or other breed with a bad reputation, your insurance company may refuse liability coverage or raise your premium. An increasing number of states, such as Michigan and Pennsylvania, prohibit insurers from singling out entire dog breeds. But the insurer can still exclude a "bad" dog, that is, one with a bite complaint filed against it. Also be prepared to pay more or be refused liability coverage based on your snake, alligator, spider, or exotic bird.

If you can't find a homeowners' policy that gives you liability coverage, you could buy one that's limited to hazard insurance. But do so only as a last resort. Look for a company that doesn't ask about your pet or one friendly to your dog breed.

CHECK IT OUT.

Don't bark up the wrong tree. When looking for homeowners' insurance that covers your dog, check out these websites: When looking for homeowners' insurance that covers your dog, check out these websites:* The Insurance Information Institute, at www.iii.org (under "Issues Updates," go to "Dog Bite Liability") (under "Issues Updates," go to "Dog Bite Liability")* The American Kennel Club, at www.akc.org (click "Dog Owners," then "Homeowners' Insurance") (click "Dog Owners," then "Homeowners' Insurance")* The American Rottweiler Club, at www.amrottclub.org, which keeps track of all manner of dog-breed related legislation.

Get Enough Liability Coverage to Cover Someone's Injuries

A standard homeowners' policy will give you a minimum of $100,000 in liability coverage. But you can imagine how someone's medical bills could top that. And if you're sued, you could end up paying additional damages. Rather than putting your house at risk of being sold to pay a court judgment, simply increase your liability coverage to a more realistic level, between $500,000 and $1 million. That should raise the premium by only about $40.

Whether to go even higher depends on how much you have to lose. If your net worth (including future earnings) is over $1 million, consider buying an umbrella policy or excess liability coverage. This starts to pay after you've used up your homeowners' liability coverage.

Taking one's chances is like taking a bath, because sometimes you end up feeling comfortable and warm, and sometimes there is something terrible lurking around that you cannot see until it is too late and you can do nothing else but scream and cling to a plastic duck.-Lemony Snicket

Your Out-of-Pocket: Homeowners' Insurance Costs

U.S. homeowners spend between about $450 and $1,300 per year for homeowners' insurance (the whole package; hazard and liability). How much you'll pay will depend on such variables as: * where you live (Texas and Louisiana tend to be the most expensive, and Idaho and Utah the least)* risk factors-both the house's and yours* how much coverage you get (what's covered and the dollar limits)* how high a deductible you agree to* discounts offered by your insurance company, and* your ability to seek out the best price by shopping around.

Risk Factors That Affect Your Insurance Rates

Topping the list of factors that an insurance company will look at before quoting you a price are: * the house's age (newer homes are considered less risky, having been built according to modern codes)* the house's size, condition, and number of rooms* other physical aspects of the house and property (for example, in some parts of the country, brick construction is considered lower risk than wood, because it reduces the possibility of fire damage)* the geographical location of the property (such as near the coast, on a hill prone to mudslides, or in hurricane territory)* proximity of a fire hydrant or other water supply and a fire station* claims filed on the property by the current or past owners (usually up to five years ago)* your personal credit score, and* your history of filing insurance claims on other properties.

TIP.

Trampolines and old roofs now on the "high-risk" list. According to our adviser Mary Husk, "Some insurance companies are no longer interested in insuring a house with a roof that's older than ten or 20 years, or they might quote you a higher rate for coverage. The reason seems to be that many homeowners fail to maintain their roofs, and then a storm may come through and wipe out a whole neighborhood's worth of roofing-a big expense. Also, whether you own a trampoline is now a standard question-the insurer will either list trampoline-related losses as an exclusion or refuse coverage altogether." According to our adviser Mary Husk, "Some insurance companies are no longer interested in insuring a house with a roof that's older than ten or 20 years, or they might quote you a higher rate for coverage. The reason seems to be that many homeowners fail to maintain their roofs, and then a storm may come through and wipe out a whole neighborhood's worth of roofing-a big expense. Also, whether you own a trampoline is now a standard question-the insurer will either list trampoline-related losses as an exclusion or refuse coverage altogether."

Reasons to Choose a High Deductible

A deductible is the amount you must pay after a loss before your insurance company steps in and starts paying. Most homeowners agree to a $500 deductible (for the hazard portion; liability insurance doesn't normally carry a deductible). However, many insurance companies now set the deductible at a higher, often percentage-based amount, such as 1% of the hazard insurance amount. Your policy may also have additional, separate deductibles for particular damages such as windstorms.

Agreeing to a higher-than-average deductible can actually be a great financial move. For one thing, it allows you to reduce your premium costs-or buy more coverage for the same premium. By raising your deductible from $250 to $1,000, you can save as much as 25% on your premiums. Some insurance companies will let you take your deductible up to $5,000 or more.

Another plus is that you may be better off not calling your insurance company for relatively small losses, anyway. Many homeowners just fix minor damage without a peep to their insurer, because of the very real risk that the company will punish them with raised premiums the following year. The raise in rates can be higher than the amount of your claim.

If only your mortgage lender weren't weighing in on the size of your deductible: Ever vigilant about protecting its collateral, your lender may place a limit on how high a deductible you agree to-often $1,000. They're afraid that if you don't keep that amount of money in the bank, you won't be able to claim any insurance after a loss, and the house will remain damaged.

No matter what deductible you choose, make sure you keep at least that amount of money in the bank. Otherwise, you risk being unable to use your insurance and facing major losses on your own.

Discounts for Lowered Risk

Most insurance companies will knock a little off your premium if your house: * has smoke alarms and fire extinguishers* has deadbolt locks* has burglar and fire alarms that report to a central service* has weather-resistant features such as hurricane shutters* was built within the last ten years, or* was built using fire-resistant construction, such as block or masonry.

Your own personal characteristics can sometimes also get you discounts or reduced rates, for example, if you're a nonsmoker or have a good credit rating (the theory being that you're less likely to start fires or to be generally irresponsible).

TIP.

Don't hide a home-based business. Its inventory, equipment, and location (if it's a separate structure like a garage) will be excluded from coverage under most policies. And your business-related visitors won't be covered under the liability portion. Either buy the added coverage, or get a separate policy. Its inventory, equipment, and location (if it's a separate structure like a garage) will be excluded from coverage under most policies. And your business-related visitors won't be covered under the liability portion. Either buy the added coverage, or get a separate policy.

Shopping Around for Homeowners' Insurance

A lot of buyers just go with the insurance company their real estate agent recommends. But doing some price comparison-preferably between three or four companies-could save you hundreds of dollars.

And money isn't your only concern. You want a customer-friendly, cooperative insurance company that will make you feel supported after damage happens, not put you through bureaucratic hoops and delay your payment. Get some price quotes and policy descriptions for the amount and type of insurance your house will need; you have three choices: * companies who sell insurance directly to you (sometimes at a distance, for example, on the phone or via the Internet)* companies that sell insurance through so-called "captive agents" who represent only that company, and* agents or brokers who represent more than one company.