Hazard insurance is required by most mortgage lenders equal to at least the amount of the mortgage. It is wise to carry more, generally to the cost of replacing your home or its market value. Hazard insurance protects against such casualties as fire and other damage caused by the elements, with the exception of flooding. A homeowner's policy, which also offers protection against theft, is commonly used. Ask your agent to sit down with you and explain the various types of coverage.

Some policies are standardized: HO-1 offers basic protection; HO-2 adds protection for certain items such as burst water pipes; HO-3 is "all-risk" coverage (but still excludes floods, earthquakes, and war); HO-4 is a renter's policy; HO-6 is for condos or co-ops; and HO-8 is for older homes.

An important component of the rate is the deductible, or what you pay for each loss. Rates are reduced as deductibles increase. The co-insurance clause specifies what minimum percentage of value must be insured for before the insurer will cover a loss in full. The insurer will never pay more than the total policy amount. When you ask your agent about hazards covered by different policies, he will probably mention glass breakage, hail damage, wind damage, etc. If you want to recover the full value, replacement cost coverage is often available at extra cost.

The typical homeowner's policy includes personal property coverage to some extent ? often to 50 percent of the insured amount of your house. So if you carry $100,000 on your house, you may automatically have $50,000 on its contents. Only ordinary household belongings are covered by personal property insurance. You must pay extra for insurance on expensive art, furs, jewelry, or sterling silver and you will probably have to have it appraised to be able to collect above a certain amount ? often $200 to $1,000 depending on the item.

The standard coverage on contents is often the actual cash value. As an example, if your five-year-old television is stolen, you may be able to collect only a fraction of its cost ? say 50 percent - because it has a ten-year life and was five years old when the loss occurred. Thus, you get paid for the five remaining years, or what it could be sold for. With replacement cost insurance you'll recover enough to replace it new, but you'll pay more for the annual premium.

Take photos, movies, or a videotape of your home's interior, including the insides of closets and drawers and keep the film in a safety deposit box. Should the need arise, you'll be able to show what you owned. Place the insurance policy in a bank vault and keep a photocopy at home for reference.