A standard homeowners policy protects against fire, lightning, wind, storms, hail, explosions, riots, aircraft wrecks, vehicle crashes, smoke, vandalism, theft, breaking glass, falling objects, weight of snow or sleet, collapsing buildings, freezing of plumbing fixtures, electrical damage and water damage from plumbing, heating or air conditioning systems, according to the Insurance Information Institute, a Washington, D.C.-based nonprofit group for the insurance industry. Such policies are "all-risk" policies, which cover everything except earthquakes, floods, war and nuclear accidents. A basic policy can be expanded to include additional coverage, such as for floods and earthquakes and even workers' compensation for servants or contractors. Home-based business-coverage, an increasingly popular rider, does not cover liability associated with the business. Insurance experts recommend that homeowners obtain insurance equal to the full replacement value of the home. On a 2,000-square-foot home,for example, if the replacement cost is $80 per square foot, the house should be insured for at least $160,000. For personal items, homeowners can increase their coverage beyond the depreciated value of items such as televisions or furniture by purchasing a "replacement-cost endorsement" on personal property. Some experts recommend an inflation rider, which increases coverage as the home increases in value.

Just adding additional information to the great answer by RealEstateGuy. A replacement cost rider is a really good idea for both the dwelling and contents. As stated, the rider for the dwelling is sometimes called an inflation guard or inflation protection rider. This "inflation" mechanism is usually a PART of the replacement cost provision applied to the dwelling. To simplify the matter I will give you 2 good examples of why this is a good idea: 1. Older home, very small, solid construction, in a semi-rundown part of Washington DC. Regardless, it was kept nice and the owners had lived there since it was built in th 1940s. Brick, plaster walls, no plastic plumbing in this baby, tile and hardwood floors throughout. Like I said, it was in pristine condition despite the neighborhood. Older couple bought their HO policy in 1976 and refused the replacement cost (RC)provision (that included inflation guard) to cut the insurance cost. In 1976 the cost estimator used to value the home by the insurance company was dead accurate for the time and type of construction. So 20 years pass and their agent dies and their file lands on my desk. In 20 years it had not been adjusted at all for insurance purposes! If the whole house was a TOTAL loss, the most they would get was $56k. In 1996 that house came in closer to $138,000. That is a HUGE difference. . .they still refused to take RC coverage, but this still illustrates my point nicely. 2. Brand new home. Custom on 5 acres. Owner acted as General Contractor to keep control costs. The total cost at completion of just the house was $375,000. Appraised value was $575k. So the insurance company just asked how was paid for the house and that is what they would base their insurance value on (with no RC or inflation guard). $375k and 575k is a BIG difference. Appraised value does not decide how much the house would cost to replace, but the difference is significant enough to cause alarm. Unfortunately, some insurance carriers or their agents use the "how much was paid" rule of thumb and it is not the least bit accurate in most cases. The moral of this is, if you pay attention to just one thing on a HO policy. . .check the insurance value of the dwelling AND the exact wording regarding replacement. Get the RC clause and make sure it includes an inflation guard.

There are two major types of insurance. One is often known as "Fire Insurance" or "Hazard Insurance" and is fully explained by The Real Estate Guy. This type of insurance is mandatory, but the amount of coverage is negotiable The other is Homeowners Warranty, which covers certain plumbing, electric, and appliance repairs. Usually the Real Estate Agent will pay one year on this kind of warranty, but the owners let it lapse after that. I recommend that you pay for the renewal as long as you own the house. I have been glad that I did. You will also be offered Mortgage payment insurance which will make your mortgage payments according to the terms you choose, but I would not recommend this type, because it is more expensive than a good life insurance policy, which you can arrange to cover your mortgage and other expenses, plus a good disability policy.

Simply. Fully Comprehensive Contents.....the most add ons that you can afford i.e Accidental damage,personal property away from the home.etc. Also Buildings insurance if you own your own property. Most Companies will do both in one policy.