For many people, the home they buy will be one of the biggest investments they will make.

“Since your home is one of your greatest assets, you should make sure it is adequately protected. That’s where homeowners insurance enters the picture,” says Fred Hubler, founder and president of Creative Capital Wealth Management Group.

Homeowners insurance protects your home from damage, your belongings from damage or theft, and your assets from liability if someone is injured on your property.

But what insurance policy should you buy?

A typical homeowners policy will cover things like fire, lightning and wind.

Other disasters such as floods, earthquakes and tornadoes require a separate endorsement or policy, a good idea if you live in a high-risk area.

Insurance companies use two methods to determine the value of property when figuring out how much they will reimburse you for a loss:

• Replacement Cost. You’re paid the cost of replacing damaged property.

• 1. There is no deduction for depreciation.
  2. There is a maximum dollar amount you can be reimbursed.

• Actual Cash Value.  You’re paid an amount equal to the replacement value of damaged property minus a depreciation allowance.

1. 1. You will need to satisfy a deductible.

A typical policy also includes liability protection for damages caused by your negligence. How much liability coverage you buy depends on the assets you’re protecting.

Costs depend on the amount of coverage, added policy endorsements and deductibles.

Always shop around and compare rates.

Learn more about Creative Capital Wealth Management Group’s no conflict of interest, retainer-based financial advice model here.