Home insurance (or home owner's insurance) is a type of property insurance. One's residence or home, including all its contents, is within the category of home insurance. The cost an insurer pays for a homeowners insurance policy is determined by taking into account the replacement cost of the home along with all of the home's contents. These values are normally determined by the value of the home as dictated by the property market and what amount similar homes sell for in that area.

Cost of Premiums

The amount to be paid towards premium depends largely on the vulnerability of the home that is insured. The more susceptible the home, the larger are its premiums. In other words, a home in an area with many or frequent natural disasters may be very costly to insure. For example, insuring a house on a beach cliff that is quickly eroding may be a very expensive proposition. In an extreme case, insurance companies may not insure it at all.