Home Insurance is insuring your home against any damage. This is somewhat different from the personal insurance that a person purchases for himself or his family. Home Insurance is a contract between the insured and the insurer that the insured gets his house insured for a amount paid to the insurer. This amount is termed as premium. The premium is fixed at one installment and it has to be decided on the value of the house that is to be insured. The insurer calculates the amount of the house that has been spend on the house and then decides that what amount it would cost to repair it in any sort of damage. The amount paid back in any damage is calculated on the basis of total cost that is incurred by the insured to to reconstruct the house.