Home owner insurance is just like every other form of insurance, in that, you need to understand what is covered and what the cost is. Let's start with a very brief understanding of home owner insurance is intended to cover and what is excluded. The easiest way to figure out what is not covered is that which is part of home construction and home maintenance. Will the insurance cover your roof? No, the roof must be replaced as needed by the home owner. Will the insurance cover your appliances? No, appliances require replacement as they age and wear out.
So, what is insurance good for? Very simply, it is good for the unexpected, the accidents, the acts of nature. Funny thing is that you need to think about the stuff that could be controlled by the owner versus the stuff that seems to happen outside of your control. Consider an example. Did you know that home owner insurance does not cover flood damage? Flood insurance is completely separate from other types of insurance and is purchased by itself. The reason is because the susceptibility to flood damage is based on the location and the construction when the home is built, in other words, you could make changes that would reduce the exposure to flood damage. Once a house is built, then the options of potential flood damage are pretty much fixed.
Consider the options of what can happen to your house. Perhaps a small fire in the kitchen and you are able to put it out but end up with water damage along with the cabinets and the appliances. Overall, you didn't lose much and this can be fixed by a professional or by yourself, over time. The insurance company will review the damage and determine what was damaged and needs replacement then they will cut you a check but there are limits, you have to actually fix the kitchen and return to pre-fire condition because that is what the payment was for and that is what is being insured going forward.
Look at the other extreme, you come home and your entire house is a pile of smoking debris, you have lost everything in the house. Okay, now what is your loss? Insurance is not just about protecting yourself from loss but it is also about keeping track of what was lost in a fire.