Should burglary or a disaster damage your home and property, there are three words you don't want to hear: "That's not covered." If your homeowner's insurance policy is inadequate, you could hear that phrase a lot when you least want to.

    Homeowner's insurance seems a simple matter: Get enough coverage to replace what could be lost or stolen, to rebuild damaged portions of the house, and to protect your-self if someone is hurt while on your property.

    That's probably why everything the insurance agent told you when you bought the policy seemed so obvious: if a tree falls on the house, the insurance minus the deductible, will pay for it. If the mail delivery person slips on the sidewalk, it's covered. Take those scenes to the next level. What if the tree was felled by ice? Some policies wouldn't cover the damage.

How Much Insurance?

    Most newer homeowner's insurance policies are issued for 100 percent of the cost of rebuilding. The old standard, before 1990, was 80 percent, based on the assumption that some portion of your house would survive most perils, so why pay extra to insure against complete destruction? If your policy was issued before 1990, you may want to review and upgrade your coverage to the new standard.

    Another rude surprise you want to avoid is making the assumption that you're 100 percent covered for the loss of your home and its contents. First, you'll need to define "100 percent." There's 100 percent of the current value. It's pretty safe to say that not everything in your house is new. So your 5-year-old television works fine, but because it's that old, it's not worth as much as it would cost you to buy a new one. If your homeowner's insurance coverage is for cash value of the contents, you'll only receive reimbursement equal to the value of your TV on the date it's stolen or destroyed.

    Then there's 100 percent of what it would cost you to replace everything. Although more expensive, replacement value policies provide better coverage. The key is knowing what you own and what it would cost to rebuild your home and replace its contents.

    Some policies include inflation clause to keep up with increasing values, but you'd still be wise to know what it would cost to replace everything in your house, and particularly the cost if rebuilding it. From time to time, check a couple of local builders for the current cost per square foot of building a home.

    Replacement policies generally have "caps" or restrictions on coverage. Talk to you agent about what your policy covers specifically- and what to extent.