Some people might say that insurance is based on the same principles as gambling, because you pay a certain amount of money on a regular basis (differs per policy), and if something happens were you are insured for, you get the payout. And of course, the amount of the payout is linked to the amount you paid on a regular basis.
However, it’s is not exactly the same as gambling.
Home insurance protects you against damage from natural disasters, like earthquakes, fires, or tornadoes, but also against human actions, like burglary and vandalism. Depending on the region you live, you should make sure your insurance covers the natural disasters which are typical for your area. For example, it’s no necessary to be insured against flood damage when you’re living near the Death Valley
On the other hand, you shouldn’t be under-insured as well. You always have to make sure your property is insured the way you want it to be, and not the way some insurance-seller wants it to be. Always ask yourself: If a fire is going to damage my home, what things have to be insured, and what is less important to me? Where are my priorities? Based on this question, you can go “shopping”, means you have a look at all the insurances fitting your needs, and then compare these to one-another.
Don’t just take the one with the lowest premium!
Of course there are cheap home insurances, offering discounted home insurances. But there is a reason they are so cheap. Often the don’t cover basic stuff, and buying one of these insurances will cost you a lot of money in case of a disaster. You’ll probably have to pay the major part of the damage of off your own pockets, and in case of a house, this can ruin you. For example, a flood destroys your entire living-room plus furniture. You have to replace the sofa, chairs, tables, television, a.s.o. Including this and other things, you have probably invested a few thousand bucks in just this one room. So whatever you do, make sure you got the right insurance!