If this is your first time purchasing homeowner's insurance, it can be easy to misunderstand what your policy covers and what it does not cover. Here are three questions that you need to ask to ensure that you understand exactly what you homeowner's insurance covers. 

1. What Type Of Risks Could Your Home Be Exposed To?

The first questions you need to ask yourself when looking at your homeowner's policy is what types of risks could your home be exposed to? You need to make sure that any risks your home could face would be included within your coverage. 

Many events that you may think are covered actually require you to purchase additional coverage. For example, if you live somewhere where floods are a risk, you may need to purchase additional coverage in order for your home to be protected in the event of a flood. 

Make sure you determine if your home faces any of the risks listed below. If your home does face those risks, be sure that they are actually covered by your insurance:

• Flood
• Tornado
• Hurricane
• Wild Fire
• Mold
• Water Damage

2. What Is The Cost To Build In Your Area?

Next, you need to find out how much it costs to build homes in your area. Specifically, you'll want to know the per-square-foot average cost of construction for the ZIP code where your house is located.

You'll need to take the average cost per-square-foot and multiple it by the square footage of your home in order to get an accurate idea of how much it would cost to replace your home in the event of a total loss. 

Once you know the cost, make sure that your homeowner's insurance policy will cover the actual replacement cost of your home. This is something you should check on every year when you renew your policy, as the price to build homes changes. 

3. How Much Cash Do You Have On Hand?

Finally, you need to determine how much cash you have on hand for emergencies. If you have set a high deductible for your insurance premium in order to save money, you need to make sure that you can actually cover damages up to that cost should they occur.

If you can't pay for your deductible, it would be wise to lower your deductible for the time being and work on building up a savings account just for home emergencies. Once you have a savings built up, you can raise your deductible again. 

Make sure that your homeowner's policy actually has you covered. Make sure that your policy will cover any events that occur in your area that have the potential to damage your home. Make sure that your policy also actually covers the cost to replace your home today and that you have cash on hand to deal with any deductibles or home emergencies that arise; make sure your insurance is working for you. 

For more tips and information on home insurance, contact a company like Reinhardt's Insurance Agency.