When you own tangible assets, such as a home, the protection of a homeowners insurance policy is essential. These policies not only cover the structure of your home but also your personal property within it. In the event of disasters such as fires, these policies will pay to replace your personal property that's been destroyed. They also serve as your primary protection against lawsuits from anyone injured on your property.

The cost of this insurance is influenced by several factors, including the location of your home, its value, and the coverage amount. The quality of the coverage is determined by the insurer's reputation and whether the policy is a 'named perils' or 'all-risk' policy. A 'named perils' policy only covers losses that are specifically listed in the contract. In contrast, an 'all-risk' policy provides coverage for all perils unless they are explicitly excluded. The 'all-risk' policy is more comprehensive, placing the burden of proof on the insurer rather than on you in case of a loss.