The amount of coverage you need varies based on the location of the home, year it was built, the contents and construction type. One key point to understand is that your coverage may not equal the amount you paid for your home. The difference is the value of the land it sits on. Should your home be burned to the ground, you still own the ground. Example. $450,000 home in San Diego, CA may have coverage of $300,000 based on its location, type of construction, upgrades and interior work. That does not mean your home is worth only $300,000, but that if it had to be rebuilt from the ground up, it is estimated it would cost no more than $300,000. Check with your insurance agent to determine if you are under-insured or over-insured for your home. Another example: A custom home in San Francisco may have a market value of $750,000, but cost over $1M to rebuild, due to custom features and extra cost for building to current code standards. Please also know that you are required by your homeowners insurance policy to carry a minimum amount (called co-insurance, check your policy for details), but it is typically at least 90% of the estimated replacement cost to rebuild. Insurance policies have this clause in place to protect the homeowner in the event of a total loss and there is not enough coverage to rebuild.