Homeowner’s insurance has some important limitations; most policies do not cover flood, war or other catastrophes. Other types of insurance coverage exist for these purposes, but it is important to read your policy to understand what is and is not covered. Some additional coverage can also be available for losses resulting from fires, and carry additional premiums as well as conditions pertaining to fire detectors, etc.

Premium vary based on a number of factors, including where a home is located geographically, where it is in proximity to emergency services, the construction materials used in the house, its age, and so on. Premiums also, of course, vary based on the underwriter. Often, discounts are provided to those who also purchase auto and other forms of insurance from the same underwriter.

Homeowner’s insurance is a requirement of most mortgage loans, so that the lender’s interest in the home is protected against loss or damage.

You’ve actually got some property coverage through your homeowner’s or renter’s insurance, but as our story can attest, there can be gaps in the coverage. Make sure you aware of those limits, that you know the difference between cash value vs replacement value and that you know which specific items are indeed covered in your policies.

Before you get insurance, take stock of the valuables in your apartment; take a photograph of the antique piano, of the 100-year old chair your aunt Martha left you (attach the expert valuation), of the beautiful Victorian bed and of the valuable Rembrandt paintings (OK, maybe they are copies, but still), and write down the value of every item for the insurance company. You’d be surprised how it adds up very quickly. It is estimated that most people have at least $20,000 of property in their apartment.

Now if you cause the damage, e.g. if your tub overflows and the water leaks into the downstairs apartment, that’s your neck in the vise. So it pays to have your liability insurance to cover other risks also, such as a person getting hurt while in your apartment, or slipping on your welcome mat and breaking a leg (even if he was drunk after your party ended). It might even cover the lawyer’s fee and court expenses in case of a lawsuit (given the national passion for initiating frivolous lawsuits to make an easy buck).