Before you pass papers on that new home, you’ll want to think about protecting your big investment with homeowners insurance in the unlikely event disaster someday comes calling-- be it wind, fire or volcanic eruption. The financial safeguard against disaster, including property loss and injuries to third parties, is homeowners insurance. While anyone can legally own a home without it, your friendly neighborhood mortgage lender will no doubt require this coverage for self-protection.

Pays to repair or rebuild the home if damaged by any of the disasters listed in the policy (which won’t include earthquake and flood unless purchased separately). Don’t base rebuilding costs on the price you paid for the home, nor include the price of the land when estimating coverage. You’ll need an insurance amount sufficient to rebuild at the going rate of construction in your area. This amount can be estimated by multiplying the home’s total square footage by the square foot cost of local construction-- numbers that can be gathered from building associations, realtors and insurance agents.