For people who own a home, insurance is meant to provide financial coverage for their dwelling and personal items. For renters, insurance is meant to provide coverage exclusively for their personal items.

Most insurance policies will require you to pay a certain amount of money, or a deductible, before they cover the loss of your property. These deductibles usually fall into one of two categories of losses, commonly referred to as Section I losses.

Section I losses include your living structure (house, apartment or other dwelling) and miscellaneous items within your home that may not be itemized such as your clothing, electronic, home appliances and furniture.

You will most likely not have to pay a deductible for what are known as Section II loses. These include medical expenses in the event of an accident or when compensating others for damage to their property.

Insurance companies are allowed to cancel policies in extenuating circumstances such as a homeowner not paying the premium, committing insurance fraud or being convicted for illegal activity that puts the home or insured items at risk.

It is usually possible to lower your premium by taking on a higher deductible. Higher deductibles may lower your monthly or annual premium but buyer beware - A higher deductible may mean a hefty out-of-pocket cost if ever warranted.