When you first think of homeowners insurance you might automatically think fire insurance. What most people don't know is that homeowners insurance covers much more extending coverage on all possessions regardless of where you are when the damage covers.

If you were on vacation, for example, and your expensive camera was stolen, your homeowners insurance would cover its loss.

Homeowners policies cover your main areas of exposure.

1. Damage to your home and / or any other structures on your property.
2. Liability for which you are found responsible in most situations in all areas of the world. If a claim is filed against you for causing a person injury or damage to property, this liability coverage will pay for all expenses and legal awards up to the limit policy.

Many people make the mistake of believing that all homeowners insurance policies are essentially the same, and that they basically cover you for any conceivable loss. This couldn't be any further from the truth, and believing the same is both disappointing and costly. A close friend, for example, made the mistake of assuming that his car stereo was covered in his homeowners insurance policy. When his car stereo was stolen, he had to pay for the bill. Unfortunately for him, he found out the hard way that he wasn't covered.

In order to find the best price on your policy, know if you are a good risk first. Some companies are very selective about the property they insure, preferring to give homeowners insurance policies mainly on what they call "preferred risks". A preferred risk is a risk that's desirable for them to take, basically because there's little chance for anything to happen to your home. A new home in a desirable neighborhood is a good example of a "preferred risk". An 80 year old home with an outdated electrical system and rotting wood would definitely be considered a bad risk.