What does the basic insurance policy cover? It provides coverage in case of:

- natural calamities like fire, lightning, ice and snow
- damage caused by theft or robbery
- smoke
- frozen pipes
- liability insurance for accidents that can happen in your home
- medical payments for accidents which involve a third party
- costs of legal procedures, if a lawsuit is brought against you

Various events for which no one can be held responsible are typically excluded from the lengthy insurance contracts. These may include: natural calamities like floods or earthquakes, war which involves nuclear explosions, as well as terrorist acts. Therefore read and study carefully your insurance policy before signing it, just to avoid later unpleasant surprises. However, there is a possibility to get an extra policy to cover some of these exclusions (usually flood and earthquake). It is essential to ask for details regarding these extra options, especially if you live in a high risk area: near the ocean, or next to a river bank.

Limit is also established regarding the insured contents: very expensive personal possessions like high-priced jewellery, hard-to-replace antiques, etc. In order to insure these you have to pay for an additional policy.

Home insurances can be of two types: fixed term contracts, which refer to a certain period of time and premiums should be paid in each term until the expiration date. The other type is called perpetual insurance which refers to an unlimited period of time, but this involves a deposit premium from the part of the insured and is calculated according to his or her salary. Each has its own advantages: term insurance is relatively cheap, but has to be updated annually, while perpetual insurance requires a greater amount of money to be paid at once, but it saves you from the annual payments and from the worries to update your policy in time.

Now let's see the basic types of home insurance policies:

- Limited policy: offers protection according to some pre-established conditions. This may cover expensive personal items in your home, such as paintings, jewellery etc.

- Named perils policy: this usually points out the possible events (natural calamities) that can be covered. This may include the costs of some repairs to your house, damage to plants for certain pre-established perils, theft of important documents (like credit cards, passports) etc.

- All risk policy: it is the most common type, offering a general coverage to your home. This includes the house itself, its contents and all the liability claims.

- Renter's insurance: covers extra features which are not included in the basic policy. It may refer to liabilities resulting from guests' or loaners' injury or damage of property. This always includes the so-called dwelling fire policy, an option designed for rented house owners, covering damage regarding the property's structure, as well as its contents.

Before choosing the insurance policy it is essential to shop around for the best offers. Compare prices and companies. Usually the cheaper offers are not the better, so try to pay attention to the reputation of the respective company. It is also important to know what your chances are when applying for a policy. These, of course, depend on the aspects of the home you want to insure. Insurance companies will be more eager to provide you the required policy if your home is a relatively new one with solid structure and is built from disaster-resistant materials. Modernization of the electrical as well as heating and plumbing systems is also welcome.

Another bonus point can be brought by the location of your home: if it is located in a safe place, for example next to a fire department, or next to a fire plug your chances to get lower insurance premiums tremendously increase. Don't forget to ask for discounts, especially if you have some security system installed (fire alarm, robbery emergency line). You can also make a combined coverage that is you can purchase both your home and auto insurance from the same company, thus getting some excellent discounts.